HL Deb 18 March 2004 vol 659 cc382-456

2.35 p.m.

Consideration of amendments on Report.

Baroness Miller of Hendon moved Amendment No. 1: Before Clause 1, insert the following new clause—

"Part A1



"SECURITY AND INTEGRITY OF SUPPLY The Secretary of State shall have a duty to ensure the integrity and security of electricity and gas supply.

The noble Baroness said: My Lords, this is a totally new amendment. It is a simple amendment that I, my noble friend Lord Jenkin of Roding, the noble Lord, Lord Ezra, and the noble Baroness, Lady Miller ofChilthorne Domer, tabled because of our disappointment at the lack of any assurance in the White Paper, in our debates in Grand Committee or anywhere in the Bill that there is a clear government policy on the security of the future supply of electricity. Over the past year or more, there have been numerous debates and questions on the subject in your Lordships' House and in the other place. There has never been a clear answer.

Many of your Lordships will have seen the television programme last week. I sincerely hope that the Minister watched it carefully. In it, participants repeatedly asked who was responsible for the security and continuity of the electricity supply—in other words, "Who is responsible, if the lights go out?". Answer came there none from the Government, either in the programme itself or in the discussion that followed, in which the Government declined to participate.

I entirely agree that the Government are not at the beck and call of any TV producer who asks them to appear on a programme. Secondly, the scenario set out in the programme could have been described as a little hyperbolic. However, the fact is that nobody seems to accept responsibility for ensuring that there is no breakdown in one of the three most basic of the essential services required in a civilised and advanced country: fuel, especially electricity.

I remind your Lordships that 37 per cent of our electricity is generated from gas. By 2020, we will generate 57 per cent of our supply from that fuel. At the same time as our dependency on that source rises by a third, the amount of power generated by coal will have dropped from 35 per cent to 16 per cent. Nuclear power will have fallen from 24 per cent to 16 per cent. On the other hand, the Government hope that generation from renewable sources in particular will rise from 3 per cent to 10 per cent. We hope that that will be the case, but, even assuming and hoping that that optimistic target is met, one need not be a mathematician to realise that renewables cannot fill the gap caused by the loss of nuclear and coal-fired power stations.

Is it wise for the Government to rely mainly on gas imported from unstable sources such as Russia, Iran and Algeria, along delivery systems that are possible targets for terrorists or are subject to the political whim of governments, as we saw in 1973, when a huge rise in prices was imposed by Middle East oil suppliers? Closer to home, we need only consider what happened when the electricity interconnector between Northern Ireland and the Republic was cut by the IRA in the 1970s. I heard Mr Jeremy Nicholson of the Energy Intensive Users Group claiming that we could rely on Norway and Holland as sources for gas. In doing so, we would, in due course, be competing for supplies with other major users such as Germany.

Then there is the Government's almost evangelical belief that wind power alone might save the situation. Even the most fervent supporters of wind power, which undoubtedly has an extremely important part to play in reducing CO2 emissions, concede that it is erratic and cannot always produce what we hope. At best, a windmill will produce only 30 per cent of its notional capacity, for no reason other than that the wind does not blow continuously. Sometimes, it blows in the middle of the night, when the demand is simply not there.

While tinkering around with marginal solutions, the Government ignore the fact that new power stations are needed to replace the worn-out ones that will go out of service or will become increasingly unreliable over the next 10 to 15 years. That is a significant timescale. It is almost the same as the lead time to build new power stations, what with planning applications and the inevitable public inquiries.

In that case, who is responsible for keeping the security of supply? "Not us", says Ofgem. In the discussion following the television programme it was made abundantly clear on behalf of the regulator that Ofgem's role is to oversee the market on behalf of consumers and Ofgem cannot make the industry build new power plants. It was also conceded that Ofgem's policy of forcing down prices to the current benefit of consumers and the Government's policy of trying to reduce inflation, was nevertheless making it uneconomical for generators to build new power stations whatever fuel they wanted to use.

The law of unintended consequences applies to this policy because not only are no new power stations planned, much less built, but uneconomic ones are being mothballed with the consequent loss of spare capacity to meet a sudden emergency such as those which happened in North America, Italy and London last summer.

As I said before, if it is not Ofgem's responsibility and if for the reason I have just given it is not the responsibility of the generators to build uneconomic plant, then who is left? Only the Government.

We cannot have a policy predicated mainly on imported gas. Unlike France and Germany who have six to eight weeks' supply constantly in reserve and we have none—which is another matter which the Government should be looking into—we cannot rely only on windmills. As I pointed out before, apart from their unreliability, as the Royal Academy of Engineering in its recent report The Cost of Generating Electricity stated, the cost of generating electricity by offshore wind farms is substantially above the cost of either gas turbines or nuclear sources. That cost is 2.3 pence per kilowatt compared with 3.7 pence per kilowatt for onshore wind and 3.7 pence for offshore wind.

Anticipating a possible query, the academy's study group confirmed that their costing included both the cost of new, modern, simplified nuclear power stations and their eventual de-commissioning. Nowhere in the debate have we discussed the cost of the fuel we will have to import. That is extremely important. Where is the money to come from? If the cost of lighting and heating every home and factory is to come from our national income, we will eventually finish up like a third world country. We will be unable to afford what we currently consider as the normal basic requirements for the standard of life which our citizens quite rightly demand.

I do not want to take up more of our very restricted time in covering all the arguments about requiring the Government to take a clear and active line on a subject on which our whole future as a leading world economy depends. The truth is that somewhere along the line we have to say who is responsible for sorting this matter out.

We have a Government who, whenever anything seems to go wrong, blame everybody except themselves—sometimes even the secretaries in their private offices. "Not my fault, guy" is the slogan over the door, I believe, of every Secretary of State. Nobody ever resigns unlike the fictional Ministers in the television programme. I do not deny that we have a Government with plenty of energy policies, but energy strategy is very much in short supply due entirely to ministerial dithering.

The purpose of this simple amendment is to concentrate the Government's mind exactly on what responsibilities they have to this country, with no ifs and buts, to see that the lights continue and that we have security of supply. I beg to move.

Lord Jenkin of Roding

My Lords, I very much support the remarks made by my noble friend Lady Miller of Hendon. I do not want to duplicate what she said. I, too, watched the television programme last week and found it a compelling piece of television. As the producers rightly said at the beginning and emphasised again at the end, it was a work of fiction because the situations envisaged in the programme have not yet happened. I am not alone in regarding it as very plausible fiction.

There is indeed growing concern in the country about the future of our energy supplies. We are witnessing the approaching end of the North Sea oil and gas industry on which we have been relying for the past quarter of a century or more. Coal and nuclear power stations are reaching the end of their lives. As regards coal where stations are not reaching the end of their lives, the European Union large plants directive may well make them wholly uneconomic.

There was no fiction about the fact of our increasing dependence in the television programme on gas from unstable regimes coming through very long pipelines. We shall be at the end and other countries will be drawing off the gas before it reaches us. There is a widespread view that this creates new energy dangers for the United Kingdom. I could quote a very large number of authoritative reports, but I shall only quote from one, and that is from an adviser whom Ministers in the DTI know well. He is Professor M A Laughton, Fellow of the Royal Academy of Engineering and Emeritus Professor of Electrical Engineering at the University of London. He has also been an adviser to the Select Committee in another place. In his report, which has a somewhat hackneyed title—Power to the People—he says at pages eight and nine: It is essential that Britain's energy policy is reviewed as a matter of urgency with the primary remit of ensuring security of power supplies. Against a programme of retirements of conventional plant, the escalating dependence on imported gas and with intermittent renewable having limited ability to contribute to security, significant questions are raised concerning the increasing vulnerability of the UK electricity supply industry". As my noble friend has said, there is a widespread view that no one is actually in charge of this. It is not the regulator, which has been stated often, and not the industry. The industry will certainly invest if it sees the stable prospect of profitably operating, a point properly made by the representative of the industry in the television programme. Who else, apart from the Government?

It may be said that our amendment states the obvious. The fact is that the Government have to be responsible. In the discussion between the politicians at the end Jeremy Paxman asked where the buck would stop. They all looked at each other and said that it will stop with the Government. They will be blamed, but it is far from clear that they accept that it is their responsibility.

My mind goes back to the debates which the noble Lord, Lord Ezra, will remember as regards the Utilities Bill in 2000. We were seeking to amend Clauses 9 and 13 of the Bill which set out the objectives of Ofgem. In Committee we sought to add the words that Ofgem, should have a duty to secure a diverse and viable long-term energy supply". That was fiercely resisted by the Government. The matter was debated briefly at Report. There is quite an interesting quotation. The noble Lord, Lord McIntosh of Haringey, was handling the Bill. He was concerned to say in his speech that it was not a matter for Ofgem in the Bill. He said, amendments such as this are a distraction and would serve to confuse rather than enhance the framework of obligations and duties under the legislation".—[Official Report, 5/7/00; col.1497.] That was the Government's line. But in the course of the debate the noble Lord, Lord McIntosh, said one very interesting sentence, at col. 1497. He said: However, security of supply is indeed the responsibility of government as a whole". One wonders why that has not been trumpeted from the rooftops by the Government. Every time the security of supply is raised as an issue of concern, one would have thought that the words of the noble Lord, Lord McIntosh, speaking from the Government Front Bench, would have been strongly relied on. In fact, we went on at Third Reading to insist that we included the words, to secure a diverse and viable long-term energy supply".—[Official Report, 11/7/00; col. 137.] We divided on the amendment and it was carried by three votes in this House. However, the Government decided, as they were nearing the end of the summer term, not to return to the matter. Therefore, those words are in the Utilities Act 2000. New Section 5, which deals with electricity, states: The Secretary of State and the Authority shall carry out their respective functions under this Part in the manner which he or it considers is best calculated

  1. (a) to promote efficiency
  2. (b) to protect the public from dangers"—
and (c) is our amendment (c) to secure a diverse and viable long-term energy supply". As we heard, successive chairmen of Ofgem have made it perfectly clear that they do not accept that duty. They cannot tell any industrialist to invest in enough plant and machinery. Their job is to protect the consumer. Indeed, the previous chairman, Callum McCarthy, told me that, because the Government had not wanted that amendment, he did not feel that he had to pay too much attention to it, notwithstanding the fact that it is in the Act.

Must not the Government accept the responsibility for, in the phrase used by my noble friend, "keeping the lights on'"? The amendment says that that is exactly what should happen. How will it be done? Perhaps this is not the moment to be going into such matters in detail, but last week, the Trade and Industry Select Committee in another place produced an interesting report, Resilience of the National Electricity Network. The committee argued that the, Regulator's concern to reduce costs to consumers should now be tempered by a greater emphasis on ensuring that electricity network owners have the financial resources necessary to secure a viable long-term electricity supply". The committee was looking at the question of transmission and distribution, but exactly the same argument applies to the generators of electricity. If the workings of the regulator do not enable the prospect of profitable operation to be seen by industry, industry will not invest.

If the Government are going to carry the can for major disruptions, as seems to be widely recognised in political circles, they should have that firm responsibility placed on them, not necessarily to do it themselves—I totally accept that the other players on the field may actually have to act—but the Government should have the responsibility for creating the conditions. They should, as suggested by Paul Colby, who was speaking on behalf of the generating industry, create the framework in which the things that are needed may happen.

I can see that my noble friend Lord Tombs is pitching to his feet to give us the benefit of his skilled advice, so I will not quote from his powerful speech in this House on 7 January. I believe that the Government should now stand up and say quite clearly, like the noble Lord, Lord McIntosh, "We accept this responsibility". That is all this amendment requires, and I cannot see why on earth the Government should want to resist it.

Lord Ezra

My Lords, I support the amendment moved by the noble Baroness, Lady Miller of Hendon, which has received such powerful support from the noble Lord, Lord Jenkin of Roding. The noble Baroness made it clear that we face a serious and uncertain situation in our energy supplies. For the first time in our industrial history, we shall move from the self-sufficiency in energy previously provided by coal—that noble industry—and subsequently by gas and oil from the North Sea. We are now moving towards a situation in which, inevitably, we shall be subject to more and more imports and therefore uncertainties. In that situation, it is obviously essential that we are clear about where responsibility lies with regard to security of supplies, especially of gas and electricity. The Energy Bill provides the opportunity for making that clear.

I have been among those noble Lords who have asked questions about where the ultimate responsibility for ensuring the security of supply lay. My impression from the various questions that I and other noble Lords have asked is that responsibility is divided in an uncertain manner between the Secretary State, the regulator, the network operators and the companies, all of whom have some responsibility. However, the meshing together of that and the ultimate responsibility have not so far been made indubitably clear. This simple amendment does that.

This is an Energy Bill. We are unlikely to have an opportunity for making the matter clear for a long time ahead. Therefore, I very much hope that the Government will accept the proposition that we should seize this opportunity and make the matter clear beyond any doubt whatever, in view of the uncertain energy supply position that we face in the years ahead.

Lord Maclennan of Rogart

My Lords, I rise to support the amendment, which is necessary. There has not been a statutory statement of the position since the Government produced their White Paper, which did more to confuse the lines of accountability and responsibility than I would have thought possible. The White Paper, in examining the question of responsibility, clearly sought to fudge the issue by including in the ascription of responsibility for energy reliability the role of Ofgem. They have subsequently not been prepared to indicate where the line of demarcation of responsibility lies between Ofgem and the Government. That is wholly unsatisfactory and has been compounded by answers in this House given by Ministers who have, when asked to make predictions, given such vague answers as, "That is a matter for industry or the regulator to decide". It is always a matter for others than the Government. I t is up to us to make it entirely plain—and if the lights go out it will be made plain by the public—that the buck stops with the Secretary of State. This is a simple amendment and it fully deserves our support.

Lord Tombs

My Lords, I support this amendment, because it is arguably the most important one before us. I will confine my remarks today to electricity, because that is where my experience has some relevance.

There is no coherent view of how electricity will be supplied in five or six years' time. Ofgem operates within what it sees as its remit in operating a few months ahead—very short-term regulation—and makes no provision in its tariffs or by any other means to encourage capital investment. Both Ofgem and the Government say that market forces will deal with such matters. They say that almost as a childlike prayer. They certainly do not say it on the basis of any rational examination. I will put forward a childlike view in the hope that the Government may take it on board.

Market forces consist of investors and companies. That is what we are talking about. If we think they will solve the medium term—that is, five to eight years ahead—on the basis of short run marginal costs, then we are being very unrealistic. For them to invest in new plant on the basis of short run marginal costs means that they will dilute their earnings. It is as simple as that. I do not understand why the Government and Ofgem cannot see this. I suspect they do see it, but do not want to admit it.

I think this is far too important a topic to be allowed to go by default. I have tried in two previous debates, which I have sponsored, to raise this question, and on each occasion I have met with very unsatisfactory, evasive answers of the type I have described as "childlike". There is lip service paid to future security of supply, in that National Grid Transco published a table of the extent by which future generation capacity will exceed demand for the next seven years. But that table is anecdotal. It is what the company says it might do. There is no commitment to doing it. It does not make any provision for the retirement of 40 year-old generating plant, and makes assumptions about interconnections which are not yet built, so it is of little real consequence. I have made that point again and again with, I regret to say, no effect.

This is such an important topic that I support this amendment, not to have somebody to pin the blame on but in the hope that it might concentrate the department's attention on the problem and make those concerned examine it, try to identify it and do their basic duty of dealing with it. The problem is that we do not have anyone effectively in control of energy policy. We have a number of departments dabbling, and a number of advisory bodies and committees also making recommendations that I have never seen. This needs to be pulled together and examined in a positive way. If not, the Government will bear a grave responsibility.

3 p.m.

Lord Whitty

My Lords, it is important we have this debate at the beginning of Report, because in Committee there were anxieties about the security of supply. Let me make it quite clear that it is a central objective of government energy policy, one of the four key policies outlined in the energy White Paper, that energy supply needs to be maintained, and the responsibilities of those operating in the market at a political and regulatory level must reflect that.

The amendment, I will argue in a moment, is unnecessary, because of the existing legislative position. Indeed, the noble Lord, Lord Jenkin, has been describing how the opposition amendment managed to convince the House. The Government, having reflected on it, decided to accept that position. It goes a very long way towards meeting the objectives of this amendment, and he is rather undermining his historic achievement in this respect.

Lord Jenkin of Roding

My Lords, the point that I was making is that the statement that I quoted from the noble Lord, Lord McIntosh, is still not in any legislation. It merely rests on his assertion. In fact, as the noble Lord, Lord Tombs, my noble friend, and others have said, I see the Government as having been trying to shuffle it off. They have not accepted that point. That is why it has got to go in this Bill.

Noble Lords

Hear, hear!

Lord Whitty

My Lords, the Electricity Act already, partly as a result of the amendment to which the noble Lord, Lord Jenkin, refers, states this pretty clearly. Legal responsibility for energy security is shared by the Secretary of State and Ofgem. The Gas and Electricity Acts require both the Secretary of State and Ofgem to exercise all their functions having regard to the need to secure that all reasonable demands for gas and electricity are met. In the Electricity Act there is also the reference to which the noble Lord, Lord Jenkin, has already referred, to secure a diverse and viable long-term energy supply". which is an obligation both on the Secretary of State and Ofgem. They have complementary roles in this respect.

Lord Tombs

My Lords, the real point, it seems to me, is that the responsibility is not unique. It is shared, at best, between the Government and Ofgem. The Government are in charge of Ofgem, and they are responsible for its terms of reference, which presently preclude it from looking at the need to encourage investment. It is no good trying to say it is already there. If it is there, it is not working. It is not working because the Department for Trade and Industry is not accepting its responsibilities. That is why there has to be a categorical requirement for that to be done.

Lord Whitty

My Lords, the point of this amendment is to write a provision into this Bill which I am arguing is already, in effect, in the Electricity and Gas Acts. The responsibility already rests on the Secretary of State. Responsibility also rests on Ofgem, which is the chief regulator of this market, to ensure that the role, which is a statutory one, is exercised in order to achieve this objective.

The noble Lord, Lord Jenkin, referred to conversations with and statements by the chairs of Ofgem, but the fact remains that Ofgem is clearly under a statutory responsibility to carry out its role in relation to the duty to ensure effective security of supply. I therefore do not think this is a legislative issue between us. I think that there is an issue between us; namely, that of how the Secretary of State exercises those powers and what are the mechanisms for the Secretary of State and Ofgem—and, indeed, the private sector—to exercise their roles in order to secure security of supply.

In a sense, for those of us with long memories, I find myself in a slightly bizarre position in that I am here saying that the main mechanism for us delivering security of supply is a highly regulated market and one that is subject to very effective guidance from the Secretary of State; but, nevertheless, it is a market solution. However, the noble Lord, Lord Jenkin, appears to be veering towards what I might call a "Stalinist solution" whereby there is a requirement on the Secretary of State to prescribe what the balance of sources of electricity supply—what the level of investment should be many years in advance of the electricity provision, and so forth—is likely to be.

The combination of a strong regulator, strong guidance to that regulator and signals to the industry from the Government do deliver a flexible system that ensures security of supply.

Lord Jenkin of Boding

My Lords, the Minister is engaging in fantasy. In its first two or three years, Ofgem interpreted its mandate to protect consumers from high prices so far that it drove one generator after another out of business. British Energy was only one where the Government had, in the end, to pick up the tab. It made Drax uneconomic and drove TXU into administration. There were also a number of others. Ofgem did not see this as its role. I had the argument with the former chairman, and he said "No, it is not for us to tell companies whether they should invest or not". The Minister is deluding himself by imagining that that is the way it works.

Lord Whitty

My Lords, I am not saying it is the role of Ofgem to determine what investment should be required of the private sector in order to deliver a particular pattern of electricity supply. Ofgem's role—that of all government bodies with a role in relation to the DTI—is to ensure that the market is sufficiently guided and regulated to deliver the capacity that is required.

Perhaps I may take a recent example, which is certainly not fantasy. It was true that in about July there were strong anxieties about the margin of capacity expressed in this House, and elsewhere, and the excess margin of supply fell to about 16.5 per cent. This is higher than many other countries, but we have normally assumed that we need at least 20 per cent. National Grid Transco, in accordance with the way the regime works, indicated that it would bring more capacity online and very soon; indeed, within a matter of months. The margin of capacity rose to over 21 per cent. That is exactly how the market should work.

Lord Tombs

My Lords, we are continuing with delusion. I have heard this said three times in the past week by Ministers, boasting about the fact that something like two megawatts of mothballed plant was restored within two or three months. That is a short-term reaction. It is not a capital investment decision. It is not a construction decision. It is not a commitment to future resources. There is not much more mothballed plant available. You cannot go on staggering from one crisis one year to the next one next year. It takes seven years to build a decent sized power station, while a nuclear one would take a great deal longer. Nothing is being done. If the Minister cares to look at the forthcoming seven-year statement from National Grid Transco—I have not seen it yet; I am predicting what it is going to say—he will see that the commitment to future plants has vanished.

Lord Whitty

My Lords, I fully accept that there are signals, and decisions that have to be taken long-term or short-term. My point is that the mechanism worked in relation to what appeared to be—or what was proclaimed by many critics to be—a short-term margin problem. The market clearly worked in that respect. There are of course long-term effects of what the Secretary of State says, dealing with the longer term problem, and what is laid down in the energy strategy and the energy White Paper.

The noble Lord will find that, in the short to medium term, there is no problem about the capacity margin. In the longer term, there is a significant amount of new capacity coming on stream. The noble Lord may say that that is still not enough, but those market signals will indicate when investment in new plant is both needed and economically viable, in so far as the market—or anyone—actually identifies a potential shortfall. There are several projects that already have the necessary consent and which will no doubt commence when the commercial position is right. They will be encouraged in so doing by the way in which the Secretary of State and Ofgem operate their functions. New capacity is already under construction at Immingham and Spalding, which will increase the margin.

There is continuous monitoring of the market. The Joint Energy Security of Supply Working Group operates between the DTI and Ofgem and reports to the Secretary' of State on the assessment of the requirements of likely demand and supply of electricity and energy generally over the forward period. Its reports are publicly available. At the end of the day, the Secretary of State has the responsibility, should alarm signals begin to ring, to ensure that the mechanism works and signals are given in the right direction, to ensure that that capacity comes on stream. I am not shirking that issue.

Lord Ezra

My Lords, the Minister has come to the point of saying that the Secretary of State ultimately must decide. That is all that the amendment says, so why not let us get it into the Bill so that there is no misconception anywhere on the subject'?

Lord Whitty

My Lords, the point I am making is that the provision is already there in the electricity and gas Acts. The problem is not whether that responsibility should be there or not, because it already is there. The problem that noble Lords have voiced, which they voiced all through Committee stage, is that they do not believe that the mechanism that we have in place to ensure that that responsibility is carried out is the correct one in a large number of cases, because it is not at present reflecting a requirement for new nuclear energy. That is a difference of substance, not a difference of powers or legal responsibility.

Baroness Miller of Hendon

My Lords, the Minister is saying that the provision is already in the Act, but could he tell us where it is? Is he talking about Clause 3 in the Electricity Act 1989? That shares the responsibility that he mentioned before and which we said was not the same thing as our very simple amendment requires.

Lord Whitty

My Lords, it shares the responsibility because both the Secretary of State and Ofgem have direct statutory responsibilities in that area. Therefore, it has to share the responsibility.

Baroness Miller of Hendon

My Lords, they do not.

Lord Whitty

My Lords, they do. Ofgem is established in statute and the Secretary of State has certain powers in statute. Taken together, they are responsible for the delivery of security of supply.

Baroness Miller of Hendon

My Lords, that is a point of disagreement between the Minister and other noble Lords who have spoken. But if that is so and it is already there, the Government clearly have no problem with it, and the only problem is that the Government have to accept our amendment.

3.15 p.m.

Lord Whitty

My Lords, the general principle of legislation is that when legislative powers, responsibilities or duties already exist, there is no point in another Act repeating them. If the noble Baroness wants to argue that every Act should repeat everything that is in a previous Act, this House will be in business for a very long time, and the number of amendments that will have to be introduced will be rather more than the number she was complaining about earlier.

The essential point is that that responsibility already exists, but it is a responsibility in part shared with Ofgem, which also has direct statutory responsibilities.

Lord Tombs

My Lords, this seems to be continuing the same pretence. The Government have an agency in Ofgem, which it instructs. It follows therefore that the responsibility lies with the Secretary of State, whose agent Ofgem is. I cannot see why the Government cannot see that. It seems to me to be on a par with their attachment to market forces, which I must say is very strange from a Labour administration. I have never heard any political party argue quite such a blind faith in market forces.

Earl Attlee

My Lords, may I take this opportunity to remind the House that short questions of elucidation to the Minister are very effective, but also compliant with the Companion?

Lord Whitty

My Lords, I thank the noble Earl for that clarification.

I am not expressing a blind faith in market forces; I am saying that this is a market solution, subject to the statutory powers and responsibilities of the Secretary of State and the statutory powers of the regulator. Because we have an independent regulator, it is separately embedded in legislation. In that sense, the responsibility is shared. As I said in response to an earlier intervention from the noble Lord, Lord Tombs, if the joint surveillance committee reported concerns to the Secretary of State, it would clearly be the responsibility of the Secretary of State to take action. But also in statute are her responsibility and that of Ofgem to conduct their affairs to ensure that that contingency and danger do not arise. That is already clearly in statute.

To accept the amendment would do two things. For one thing, it would accept the rather alarmist assessment of our energy position. After all, the fact that we are a net energy importer puts us only on par with most members of the G7, which have been net energy importers for decades and in some cases for centuries—well, perhaps not centuries, but certainly decades. If managed properly, that is not a source of vulnerability. Either we are succumbing to unnecessary scares, both short term, as has been expressed here over the past few months, and long term, or we are simply trying to repeat something that is already clearly there in legislation. Neither would be a sensible decision for the House to take, so I should like the House to reject the amendment.

Lord Maclennan of Rogart

My Lords, it seems from what the Minister has said that he has confounded the existing confusion. It is not clear from what he has said about earlier statutes that he is acknowledging that the Cabinet Minister responsible for energy, or any other Cabinet Minister, has an over-riding responsibility for security of supply. Instead, he seems to be enunciating a position that Parliament has curtailed in some way, to the extent that it has delegated the responsibility for regulation, the ultimate duty to provide for security away from the Secretary of State. With respect, that is like suggesting that the security of the Tower of London rests in the hands of the Yeomen of the Guard. It is not at all an answer that will give reassurance to those concerned about the substance of the issue.

The deliberate evasion of the case, which we have witnessed this afternoon, is frankly puzzling if it is not to be interpreted as an attempt to pass the buck for future failures of supply to some body other than the Government themselves. However they may try to do that, they will not do it with the assent of the House.

Lord Davies of Oldham

My Lords, I hope that that is the last speech this afternoon that masquerades as an intervention for a short elucidation of what the Minister is saying. This is Report stage, not Committee, and we cannot have long speeches intervening on the Minister.

Lord Whitty

My Lords, this will be my final go at trying to explain. In statute, Parliament in its wisdom, and with the support of all parties, has given certain direct statutory responsibilities to Ofgem. The legislation requires Ofgem, among other things, to exercise those functions with regard to the necessity of securing security of supply. The Secretary of State—the Secretary of State is a collective term, as noble Lords will recognise—also has responsibilities. He cannot have a completely unqualified responsibility if there are direct, statutory responsibilities laid upon Ofgem.

Clearly, in the circumstances where a serious problem arose or was anticipated, the Secretary of State would in reality have the primary responsibility for doing something about it. But it would have to be a situation where the operation of the system as envisaged by statute had not worked. We believe that the operation that is envisaged in statute, augmented by the statements of government strategy in the energy White Paper and elsewhere, will work. Within that structure Ofgem does have certain responsibilities to exercise. Therefore, it cannot be said that the Secretary of State is responsible for everything without qualification.

Of course, politically the Secretary of State is almost always responsible for everything. But Parliament in its wisdom has by statute given some responsibilities to an independent regulator, and rightly so. To accept this amendment, in a way which undermines the independence of the regulator, does not seem to be sensible, particularly given that the main point of the interventions the responsibility of the Secretary of State—already exists in statute. This is not an exercise in buck-passing. It is an exercise in recognising how the system works, how Parliament has determined that it will work and what is already reflected in the Energy Acts and the Gas Acts.

Baroness Miller of Hendon

My Lords, clearly the noble Lord and Members on this side of the House do not agree. The amendment that we have tabled is simple and straightforward: The Secretary of State shall have a duty to ensure the integrity and security of electricity and gas supply". I should have thought that the Government would want to have that. I can assure the Government that if people sit in the cold and dark they will not blame any of the divisions that the Minister talked about; they will blame the Government. Therefore the Government should take the responsibility. I wish to test the opinion of the House.

3.23 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 119; Not-Con tents, 84.

Resolved in the affirmative, and amendment agreed to accordingly.

3.34 p.m.

Baroness Miller of Hendon moved Amendment No. 2: Insert the following new Clause—

"ANNUAL REPORTS UNDER SECTION 1 OF THE SUSTAINABLE ENERGY ACT 2003 (1) In addition to the matters specified to be included in the annual reports required under section I of the Sustainable Energy Act 2003 (c. 30), the reports shall contain information on the development of new energy sources including, but without prejudice to the generality of those words, energy derived from—

  1. (a) clean coal technology
  2. (b) biomass
  3. (c) biofuels
  4. (d) fuel cells
  5. (e) photovoltaics
  6. (f) wave and tidal generation
  7. (g) hydrogeneration
  8. (h) microgeneration and
  9. (j) geothermal sources.
(2) The information to be given shall describe any research, development and demonstration work done in the reporting period on each of the energy sources covered. (3) The annual reports shall set out what is being done by the Government, by government agencies, by UK research establishments, by UK Universities and by industry to ensure that the UK retains and expands, if necessary, the scientific and engineering expertise and the resources to develop effectively sources of energy enabling the UK to avoid undue reliance on imports and if the decision is taken to develop any other energy source or technology, including nuclear, the UK will have the ability to do so. (4) The annual reports shall set out what is being done by the Government, by government agencies, by UK research establishments, by UK Universities and by industry to ensure demand is reduced and efficiency is increased in UK energy supply. (5) Information given under this section shall exclude any information for which commercial confidentiality, within the meaning of section 43 of the Freedom of Information Act 2000 (c. 36), is claimed and upheld. (6) This section shall apply to any annual report published after the first day appointed by the Secretary of State under section 169(2) of this Act.

The noble Baroness said: My Lords, this amendment is in my name and that of my noble friend Lord Jenkin of Roding. It is also in the names of the noble Lord, Lord Ezra, and the noble Baroness, Lady Miller of Chilthorne Domer. This amendment serves a similar purpose to the previous one. It relates to the Government's responsibility for ensuring security of supplies. It approaches the problem by requiring the Government to make specific annual reports on the progress—or otherwise—being made on the development of new energy sources. The Government have plenty of policies about energy. However, they are critically short of strategies to carry those policies into effect. With all the vacillation in which the Government are engaging, time is slipping away. We are rapidly approaching an era when for the first time in our long history, we will cease to be self-sufficient in the fuel to heat and light our homes and to power our factories. I do not speak of petrol and diesel fuel of which we have had our own supplies for only a comparatively short while. However, there too our resources are finite.

I shall not repeat the litany of dates when our coal will be finished and our gas and nuclear power gone as well. The Government are failing to take advantage of the short time that we have left before we are utterly dependent on unstable regimes such as those in Iran and Algeria, for the majority of our vital fuel supplies. Supplies from the Caspian Sea area will have to travel a long and expensive way through pipelines vulnerable to sabotage by terrorists. That has already happened to pipelines that Iraq depends on for its vital oil exports.

We need to safeguard our ability to live the normal life of an industrialised first-world country and not to descend into the regime endured by the Eastern Bloc until very recently and from which they are only just emerging. Almost certainly the Government are relying on supplies of gas. While they are also encouraging heavy wind power investment which as your Lordships know is only an intermittent and unreliable source, there are many other resources that have to be exploited and not neglected. Over these the Government are dragging their collective heels. In some instances they are positively ignoring or refusing to support other sources.

I invite the House to look at the list of nine potential sources of fuel in subsection (1) of my new clause—it contains quite a menu. One of those listed is clean coal technology. Far from encouraging this technology in which this country is a world leader, it is withering on the vine. I shall not take up our limited time in discussing all the nine fuel sources, but if everything goes perfectly well, the contribution of these nine sources will make only a comparatively small dent in our future fuel requirements, albeit a very important one.

The Government must not allow those sources to be neglected and the reporting requirements in this clause will make sure that they are not overlooked. On the basis of the Government's own optimistic estimate, renewable sources will make just a 10 per cent difference to our Kyoto commitments by 2010. It is important that a close eye should also be kept on progress—or lack of it—that is made in the exploitation of other renewable fuel sources. That is the reason why we have tabled this very important amendment. It will facilitate monitoring of the progress—or otherwise—in respect of the Government's policy on renewable energy sources.

In the same way, it is no less important that research into nuclear power should be kept under continual review so that the essential skills and this country's expertise as a world leader are not lost. Our scientists should not be compelled to take part in a brain drain to continue their work. The Government frequently talk about "keeping the nuclear option open". They are paying only lip service to the concept because it is perfectly obvious they are trying to kick the topic into the long grass. Or they are frightened to grasp the nettle. Your Lordships can pick whichever metaphor you think is better.

In Grand Committee, I proposed Amendment No. 12, which said: Within five years from the passing of this Act, the NDA shall submit a plan … to the Secretary of State on the feasibility of building and commissioning new nuclear power stations to replace those becoming or likely to become obsolete within the ensuing fifteen years".—[Official Report, 15/1/04; Col. GC 185.]

The Minister did not really understand the plain words of my amendment. It is clear that he did not really understand what my amendment said. Omitting some irrelevant words, he said in reply: The NDA has been given the crucial … task of carrying out the secure … clean-up of our nuclear legacy … The … estimated time-scale is 100 years. The noble Baroness suggested that after the NDA had done that, it might like to move on to something else."—[Official Report, 15/1/04. Col. GC188.]

My Lords, I suggested no such thing. I did not suggest that the NDA should wait 100 years. I suggested that, using its expertise, it should prepare a plan within five years to cover the situation for the ensuing 15 years. I do not suggest for one moment that the Minister deliberately misconstrued what I was proposing. However, it is perfectly clear that he did not understand what I was saying. I shall try and explain it again. I am not—I emphasise this—suggesting that the Government should commit themselves to a policy of new nuclear build which they clearly do not wish to do. I am just asking that as a part of—in the Government's own words—"keeping the nuclear option open", they make sure that a nuclear policy is constantly under review. This will be done, in the words of proposed new subsection (3), by ensuring that the Government and their agencies and the United Kingdom research agencies and universities maintain a degree of interest—to use the mildest word I can—in the topic of nuclear power and that the Government include in their annual report the current state of play of all these energy sources.

I repeat that I am not asking for anything more than that the issue should be kept under review. I stress emphatically that this is without any commitment by the Government to any future course of action. All they have to do is review the energy sources. As the Minister, in rejecting my previous amendment, suggested that the NDA would either be too busy to keep an eye on the future potential revived nuclear power industry or would not be capable of doing two things at once—cleaning up the present nuclear legacy at the same time I am proposing simply that we hand it straight back to the Government who can either do it themselves or find someone else to whom they can delegate this watching brief.

A few moments ago I used the phrase "keeping a close eye" in relation to topics covered by the proposed new clause. "Keeping a close eye" means receiving annual, accurate and authoritative reports from the Government, not spin, not waffle or mere pious hopes irrespective of the amount of actual delivery. The Government profess a belief in openness. Complying with the reporting requirements of this amendment would keep them right up to the mark and the consumers of electricity would be fully informed. I beg to move.

3.45 p.m.

Lord Jenkin of Roding

My Lords, my noble friend made a powerful case for what seems to me to be a very sensible addition to our armoury. I hope that I shall be forgiven if I concentrate on subsection (3) of the proposed new clause although I shall return to the rest of the amendment before I sit down.

First, it is useful to remind ourselves of the words in the energy White Paper issued last spring. It referred to what my noble friend referred to as—it is a kind of shorthand—keeping the nuclear option open. I have coined the acronym KNOO. However, it is not called that. Paragraph 4.68 states: While nuclear power is currently an important source of carbon free electricity, the current economics of nuclear power make it an unattractive option for new generating capacity and there are also important issues for nuclear waste to be resolved. This white paper does not contain proposals for building new nuclear power stations. However, we do not rule out the possibility that at some point in the future new nuclear build might be necessary if we are to meet our carbon targets". Many people regard those as wise precautionary words. Of course, some, such as Greenpeace, herald it as the end of the nuclear age. However, that is rather absurd. We shall be depending on nuclear stations—Magnox, AGRs, Sizewell B, our pressurised water reactor—to continue to operate right through the 2020s—and Sizewell B into the 2030s. It is right to note that other countries are now investing in new nuclear capacity in a number of ways through the improved methods that are becoming available.

However, on one matter the statement in the White Paper was quite wrong when it simply asserted as a matter of fact that the cost of supplying power from nuclear was uneconomic. In this context I draw the House's attention to a very recent report published by the Royal Academy of Engineering, The Cost of Generating Electricity. A substantial piece of work was carried out for the Royal Academy of Engineering by the consultants, PB Power, who have a high reputation. One is tempted to quote large chunks of the RAE report but I shall quote two paragraphs from the press release that was issued by the Royal Academy of Engineering when the report was published: 'This may sound surprising', says Academy Vice President Philip Ruffles, who chaired the study group, 'especially as we have included the cost of decommissioning in our assessment of the nuclear generation costs". The press release continues—this is the point— The weakness of the Government's Energy White Paper was that it saw nuclear power as very expensive. But modern nuclear stations are far simpler and more streamlined than the old generation—the latest are only about half the size of Sizewell B—and far cheaper to build and run". I have heard a number of lectures recently from people who are—

Baroness Miller of Chilthorne Domer

My Lords, I am sorry to interrupt the noble Lord but while he is spelling out the costs of nuclear power, would he say that the costs of building and running the stations take into account the cost of disposing of nuclear waste because that, of course, is the greatest part of the bill?

Lord Jenkin of Roding

My Lords, the noble Baroness does not need to talk to me too much about nuclear waste. I served on the Select Committee of this House under the chairmanship of the noble Lord, Lord Tombs, when we considered this matter in great detail three or four years ago. I am coming to the point that the noble Baroness made. I said that I would quote again from the press release of the RAE. Secondly, the Notes for Editors give the figures for the costs in pence per kilowatt hour of generating electricity for "base-load" plants that were considered in the study. At the lower end of the scale they include gas-fired combined-cycle gas turbines, nuclear fission plant, coal-fired circulating fluidised bed steam plant and so on. All those methods cost less than three pence per kilowatt hour. The more expensive methods included poultry litter-fired bubbling fluidised bed steam plant, at over twice the previously mentioned cost, onshore wind, offshore wind—the relevant figures were supplied—and wave and marine technologies. The report makes it perfectly clear that the figures for nuclear power include the whole cost of decommissioning and their share of dealing with waste.

I agree with the White Paper that the issue of waste must now be addressed. Our report gave the Government a very clear way ahead. As the noble Lord, Lord Oxburgh, has been fond of saying in the past, they kicked it into the long grass. I hope that we shall hear more about this from the Government. They really must deal with the problem of the disposal of long-term waste. There is a later amendment on that issue.

If one looks at the figures for offshore and onshore wind, one of the problems is that you must have standby generating capacity for the periods when the wind does not blow. One of the most telling moments in the television programme the other night was when the vanes stopped going round and no electricity was produced. I recommend to the Government as a serious piece of work this work on the comparative costs produced by the Royal Academy of Engineering entitled, Can we Afford to Keep the Lights On?: Real Future Electricity Costs.

There are, of course, new designs for nuclear. There is much experience in the rest of the world. There are ample supplies of fuel distributed across some very stable economies in the world. Those supplies are widespread and secure.

The third point is that nuclear is—as the White Paper rightly said—a carbon-free technology. Yet it is extraordinary that it does not qualify for any of the incentives for carbon-reducing measures. The noble Lord, Lord Lea of Crondall, who is not present at the moment, has tabled a very interesting amendment, Amendment No. 200, in which he proposes the end of the climate change levy as applied to nuclear generation. I have added my name to that amendment and we shall, of course, support it.

My fourth point is that in Grand Committee we moved a series of amendments to deal with skills, training, university courses, research, development and demonstration. The Government's current policy is to spend £5 million per year over four years on fission research. As I said to the noble Lords in Committee, that is regarded with complete derision by the industry as being worth virtually nothing.

We also talked about the external costs of different technologies and, again, nuclear power comes out extremely well. The new clause requires the Government to give the country regular updates. We base that on Clause I of the Sustainable Energy Act 2003, under which the Government are enjoined to provide an annual report on these matters.

In Hansard of 3 February under the heading "Energy White Paper", I was intrigued to read a Ministerial Statement (repeated by the noble Lord, Lord Sainsbury), which said: The energy White Paper first annual report will be published soon after the Easter Recess".—[Official Report, 3/2/04: col. WS 21.] It goes on to note that a number of other papers will be published at the same time. I am very glad that the Government are making that a reality. We are asking for there to be a whole lot more in it.

I return to the terms of the amendment. All the new sources of energy that are listed in subsection (1) of the new clause are important, but I would like to draw particular attention to four of them.

First, clean coal technology. My son recently returned from a short visit to America, and he said that he was astounded to see huge American trains loaded with coal going through the Rocky Mountains. The Americans are spending an enormous amount on developing clean coal technology.

In this country we have almost unlimited supplies of coal, and as the noble Lord, Lord Ezra, has pointed out with great vigour over a long while, we seem to be doing extraordinarily little about it. In this amendment we ask the Government to report annually on what is being done to develop clean coal technology.

Secondly, I would like to mention biofuels. We had an interesting debate in Grand Committee on the encouragement of biofuels. These could be an example of self-sustainable development, but it seems that the Government have astonishingly little interest in them. As a young man, I remember being able to buy Cleveland Disco' petrol from filling stations. That was based partly on alcohol from fermentation.

Thirdly, the amendment also mentions wave and tidal generation. It would be very helpful to know what the Government and others are doing in encouraging research into that. The fourth, another particular interest of noble Lord, Lord Ezra, is microgeneration. The other forms of energy are important, too.

In subsection (2) we ask that we should be given information about, research, development and demonstration work done". In subsection (3) we are looking for the development of the necessary skills and expertise, so that we will not be faced with "undue reliance on imports"; that is, imported technology. We must have a report on what the Government and others are doing to make a reality of the nuclear option. All the important considerations are there. I believe this amendment would make a notable and valuable addition to these annual reports.

Lord Ezra

My Lords, I support the amendment moved by the noble Baroness, Lady Miller of Hendon, on which the noble Lord, Lord Jenkin of Roding, has just spoken.

The purpose of the amendment it to extend the range of subjects dealt with in the annual reports under Section 1 of the Sustainable Energy Act 2003. It will enable the Government to give a fuller, more wide-ranging report than was originally envisaged, and follow up all the points raised in the energy White Paper. I will confine my comments to subsections (1),(3) and (4) of the amendment.

In subsection (1), as the noble Lord, Lord Jenkin of Roding, pointed out, there are a number of new energy technologies that need to be developed vigorously, and for which the Government have already expressed their support. It would therefore be highly desirable that, in addition to the subject of wind energy—which would be included in the annual reports as originally conceived—these further subjects should also be reported on regularly. I am sure that the Government would approve.

The point of subsection (3) is that we should be ready with the necessary resources and skills to avoid undue reliance on imports. Surely, this again is a self-evident objective. We should have regular reports on how those skills and resources are being maintained for that purpose, so that, should there be any difficulty over imports in the longer term, we can be assured that we shall have the resources to diminish our need for them.

Subsection (4) deals with the important issue of reducing demand wherever possible, and increasing efficiency. Increased energy efficiency is an important part of government policy. They have still to announce what they plan to do in the domestic sector, where, unfortunately, a great deal of energy is still wasted. It would not be unreasonable for the annual reports to include that issue. This is a reasonable proposition that complements what is already in the energy White Paper and covers subjects in which the Government have said they are interested.

Lord Maclennan of Rogart

My Lords, I, too, wish to support the amendment. I will be brief, as the broad arguments of principle have already been effectively deployed.

First, in the Government's White Paper on energy, paragraph 4.60, regarding new options for the longer term, says: Technology will almost certainly surprise us in the field of renewables as elsewhere". That may be so, but we should not be more surprised than we need to be. If annual reports are made available on the subjects outlined in subsection (1) of the amendment, we shall be less surprised and more capable of deploying the information constructively.

Secondly, the Government's position on nuclear power is a fence-sitting one, in a somewhat pejorative sense. As the Government's White Paper says, it is true that the current economics of nuclear power make it an unattractive option for new generating capacity. The important word to emphasise in paragraph 4.68 of the White Paper in which they make that statement is "current" economics. No doubt that will change with the benefits of technological developments and the work that is being done in nuclear decommissioning. These developments ought to be made available as they become known to enable the economics of nuclear power to be reviewed.

Those that follow these matters feel that the Government would like to put such issues on one side. They want the uncertainties over waste disposal issues to be reported on not as soon as may be, but after the next general election. One recognises that there is a distinct lack of enthusiasm for open debate about these issues at this time. One can assume only that it is due to a political sensitivity of the subject as it is perceived.

That seems to me to be another solid reason why we should have factual annual reporting on the options. It would enable the eventual debate, which must involve the public as the Government have indicated, to take place in a properly informed manner. The many possible options should be fully considered and the reliance on importance is a developing issue on which we should have periodic and regular reports. The impact of what is happening in the former Soviet Union on the security of our supplies cannot be taken as a settled issue. It must be given frequent reconsideration. The obligation to report in the manner proposed in the amendment ought to be continued, particularly in a democracy where energy supplies are so much the subject of debate.

4 p.m.

Lord Tombs

My Lords, I, too, support the amendment. It is included in the annual reports required under the Sustainable Energy Act and it would make those reports more comprehensive and helpful. If, as I anticipate, the Government state that it will be difficult to collect all the information, that is an added reason for accepting the amendment. Doing so might bring a degree of focus into a highly defused situation—as in the case of the previous amendment.

Lord Monro of Langholm

My Lords, I support the amendment because it will keep nuclear power before the Government and the public as an important alternative to other renewables. I hope that Ministers have on their desk a Scottish newspaper because they will begin to see a mounting tide of objection to the many new wind farms now developing in Scotland.

More importantly, the public have begun to realise that the wind farms require transmission lines. Already the new national park in the Grampian area has said, "No, on no account are we going to have 300-foot pylons through the national park and down the spine of Scotland". Indeed, people in Ross and Cromarty near Beauty are complaining bitterly about the establishment of 300-foot transmission lines without any consultation at all.

Throughout Scotland, the mounting view is that enough is enough. We cannot ruin our picturesque countryside with such a large number of wind farms. After all, if one tried to erect a factory in the countryside, one would be told, "No, not at any price". But if one wanted to erect a commercial development, such as wind farms, the Government would say, "Yes, at all costs. Bring it here". They do not seem to understand the difference between the commercial development of wind farms and the commercial development in industry.

It is interesting to note that even this week, the Scottish Executive turned down the first appeal for a hydro-electric scheme at Sheildaig. Every other appeal on wind farms or renewable energy sources have been approved willy-nilly by the Executive. The public are beginning to say, "Stop, we've had enough". If we had one or perhaps two nuclear power stations in Scotland, we would be able to do away with all the wind farms and other unsightly renewables.

It is such a paradox because the noble Lord, Lord Whitty, is developing new CAP policies in order to improve the environment in the countryside while here he is doing exactly the reverse by encouraging the development of wind farms which will make it so unattractive.

I would like him to comment on the attitude of the Ministry of Defence to wind farms. It has said that there can be no wind farms within a 50-mile radius of the Eskdalemuir magnetic observatory without upsetting the scientific instruments that are operated there. That would have an enormous impact on planning wind farms in the south of Scotland.

I want to see more nuclear power. It is an exceptionally good way of providing electricity at reasonable cost without upsetting the environment. I hope that the proposed new clause will keep before the Government year in and year out the fact that there is an alternative. They are constantly running away from nuclear power, which is wrong in the present climate.

Baroness Miller of Chilthorne Domer

My Lords, it is interesting that the amendment is supported by people who are anti-wind power and pro-nuclear power and those, like myself, who for a number of reasons have declared themselves anti-nuclear power and pro-renewable energy. I shall not take up the time of the House by elucidating on that.

The amendment spells out the importance of diversity of supply, which goes a long way to ensure the integrity of supply. If we have substantial annual reports on all the available technologies, together with the pros and cons of each, and the costs and benefits, those of us who believe that renewables will have an increasing part to play and that fuel cell technology is an exciting part of the future, will be able to see the progress that is being made in each area. That is extremely important.

Like my noble friend Lord Ezra, I believe that we need much more information on subsection (4) of the amendment, which ensures that demand is reduced. A great deal more needs to be done and we need to see much more. Every year, we need to see exactly what is happening on that front. I strongly support the amendment.

Lord Dixon-Smith

My Lords, I, too, support the amendment and I hope that the Government will accept it. I cannot see why they do not. It does not require them to do anything that they are not already doing, apart from the fact that it requires them to report to Parliament on what they are doing. They may be a little frightened, because they may have to reveal that they are not doing what they ought to be doing, which might be slightly embarrassing. However, I do not believe that that would be the situation.

I, too, have an interest in the matter and I want to refer to the interesting report from the Royal Academy of Engineering. It is a fascinating paper but part of the problem is that it is a recent one. It was published only about a week ago, so perhaps all Members of the House have not had time to study it. It makes some interesting cost comparisons and the first point to make is that the Royal Academy was looking over a 20-year time-scale. That brings me back to the point made by the noble Lord, Lord Maclennan of Rogart, that new technology sometimes surprised us. In this field there are not likely to be many surprises in new technology, of which we are not already aware, that will greatly affect matters in the 20-year time-scale that the academy was studying. If we are already aware of such a technology, it should be reported upon regularly, together with any developments. Of course, if something new came along, that would be good.

There are two other matters that need attention. Behind the whole issue lies the question of cost to the consumer. We have already had enough discussion on that, but we need to bear in mind that we have international obligations in the energy field as well as obligations to our communities. One of those relates to carbon dioxide, where we have obligations nationally to reduce our CO2 emissions below the 1990 figure. I shall not explore that in any further detail, except to say that the question of long-term carbon dioxide emissions will become a major policy driver in everything that we do. There is not much point in having a wonderfully sophisticated and prosperous community if the process ruins the climate so that it is not worth living in. There have been predictions of what is likely to happen by 2080, when living in this country may become uncomfortable while other parts of the world may be becoming unable to be lived in. So the issue will become a policy driver.

Then, the problem is that if that obligation is brought hack into the fuel equation, the cost of carbon dioxide sequestration will begin to make coal a very expensive source of energy and oil will be fairly expensive. Those costs will not quite be as high as wind power, which, unfortunately, has the problem of the need for hack-up. The Royal Academy's report used a back-up figure of 65 per cent. The noble Lord, Lord Christopher, who is the Minister's noble friend, said at Second Reading that the Danish experience was that the figure probably ought to be greater than 65 per cent. That would add to the costs of wind power.

When one compares the relative costs of wind power onshore, wind power at sea, oil, and coal using CO2 sequestration, there is no question but that we must consider the nuclear option. But that is a coincidence. For the sake of absolute clarity and for the noble Baroness, Lady Miller of Chilthorne Domer, if she does not already understand, the cost of decommissioning was included in the study. I shall hand her the relevant pages afterwards.

The amendment requires the Government simply to report on what they must already be doing. If they are doing it, then, for the life of me. I cannot see why they do not agree to it.

Lord Whitty

My Lords, I thought that we were to have a straightforward debate about what should be in an annual report and how much of that should be prescribed on the face of the Bill. Noble Lords have recognised that there is already an obligation under the Sustainable Energy Act for the Government to report annually on energy. I believe that the noble Lord, Lord Jenkin, said that our statement made clear that we would publish the first report shortly after Easter and there would be a number of other more detailed documents associated with that relating to different aspects of energy policy—including energy efficiency, referred to by the noble Lord, Lord Ezra.

Other parts that might be covered by the amendment are already in the public domain—for example, the recent conclusions of the renewables innovation review, which the DTI and the Carbon Trust recently conducted. Ongoing information is provided by the DTI on its website. So, as part of a process, the Government will report on a range of topics not dissimilar to those set out in the amendment. However, the degree to which annual report requirements are prescribed in detail on the face of the Bill varies—but they are rarely as detailed as this. One has to ask why they should be set out in such a detailed manner. I am afraid that a third at least, and possibly more, of this debate has revealed the true motivation behind the amendment; that is, rather strangely and not immediately evidently, to provide a further Trojan horse for bringing the use of nuclear power back on to the agenda in a way which is not in line with the current energy White Paper strategy. We shall debate that at various points during this Report stage. It is not appropriate as a motivation for what should be reflected in the report and yet a large proportion of the contributions in this debate indicated just that.

I rarely accuse the noble Baroness, Lady Miller of Chilthorne Domer, of appearing naive but, in this case, I believe that she happily said, "Well, this must prove that it is a balanced requirement because I can support the amendment as well". However, the true motivation behind proposed new subsection (3) in the amendment is now revealed: it is not about information; it is about trying to change the policy. I warn the noble Baroness not to be fooled into going down that route.

4.15 p.m.

Baroness Miller of Chilthorne Domer

My Lords, with respect to the noble Lord, I considered very hard whether I was being naive and whether the amendment was, indeed, a Trojan horse. He may be right that that was the motivation for some people, but I believe that through the amendment we are asking for all the facts to be laid in the open. If, as he and I believe, nuclear power is not to have a future for a number of very good reasons, that will become apparent in the reporting.

Lord Whitty

Indeed, my Lords, or the opposite may happen. That would be reflected in the requirement which the Sustainable Energy Act already places on the Government and it will be covered in annual reports which, again, are already required. But, to say the least, this degree of prescription for an annual report is unusual in legislation and it should be seen as the motivation for a particular objective. On both counts, I believe that the House should not adopt the amendment.

There may have been other, more mild amendments under which the Government would have been required to consider spelling out our obligations in the annual report. But, in reality, the requirement which already exists covers, and will be interpreted by the Government as covering, the vast majority of the issues which have been referred to in this debate and in the amendment. We do not need the issue to be set out in a more prescriptive and perhaps slightly unbalanced way, as is the case in the amendment. Therefore, I hope that the matter will not be pursued.

Baroness Miller of Hendon

My Lords, with regard to the Minister's last point, in which Bill was it laid out so clearly?

Lord Whitty

My Lords, in the Sustainable Energy Act there is a requirement for an annual report which should cover everything raised in the energy White Paper. That includes the role of renewables, the role of energy efficiency, the role of CHP, the role of keeping the nuclear option open, and so forth. Therefore, we are already required to detail most of the issues in practice, probably all the issues—included in the prescription.

However, the prescription sets out the order and the method, and it is clear that what might appear to be a fairly innocuous reference to nuclear power is being interpreted by the noble Baroness's colleagues—and, to some extent, by the noble Baroness—as being the way in which we obtain a shift in policy rather than a report on the facts and the degree to which the policy is being delivered. In that sense, I do not believe that this is entirely a matter of what is reported; it is also an attempt to shift the policy.

Lord Maclennan of Rogart

My Lords, I am most grateful to the Minister for giving way. I wish to make a brief point. He said that it is unusual to take such a step in requiring annual reports to be so detailed, but surely he will appreciate that we are in an unusual situation so far as concerns energy. In a previous debate, a right reverend Prelate described the climate change phenomenon on the world as perhaps being ahead in terms of significance of even terrorism. When we are considering the security of supply and climate change, this is not unusual; it is surely prudent.

Lord Whitty

Yes, my Lords, and, in addition to a legislative requirement on reporting on energy policy, the Government are also required to report periodically on the climate change programme. That reflects the fact that the Government agree with the right reverend Prelate, the noble Lord and the chief scientist that this is, indeed, one of the most important issues—possibly the most important issue—facing the world today. However, the obligation is already in place. This detailed prescription of it is somewhat misleading and it is not particularly helpful in ensuring that the information on the delivery and deliverability of the energy White Paper, which is what should be covered by the annual report, is any clearer than the way in which the Government are already obliged to present it.

Baroness Miller of Hendon

My Lords, this amendment is in no way prescriptive. If the Minister reads the amendment carefully he will see that it says, if the decision is taken". He impugns motives to me that I do not have. I made it perfectly clear in my speech that I was not saying that. I hope that the Minister will have the courtesy to read carefully what I have said and accept it. Furthermore, he impugns or suggests that somehow we have persuaded the noble Baroness, Lady Miller of Chilthorne Domer, who can speak very well for herself, that this is all right. The whole thing is—my noble friend says "outrageous"—an absolutely unbalanced view. It is unusual for the Minister to speak in that way. There is no point in saying any more. It is appropriate to test the opinion of the House.

4.20 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 110: Not-Contents, 82.

Division No. 3
Addington, L. McColl of Dulwich, L.
Anelay of St Johns, B. MacGregor of Pulham Market. L.
Astor of Hever, L.
Attlee, E. Maclennan of Rogart, L.
Avebury, L. McNally, L.
Barker, B. Marlesford, L.
Beaumont of Whitley, L. Miller of Chilthorne Domer, B.
Biffen, L. Miller of Hendon, B.
Blaker, L. Molyneaux of Killead, L.
Bradshaw, L. Monro of Langholm, L.
Bridgeman, V. Monson, L.
Brooke of Sutton Mandeville, L. Mowbray and Stourton, L.
Brougham and Vaux, L. Moynihan, L.
Byford, B. Murton of Lindisfarne, L.
Caithness, E. Newby, L.
Chorley, L. Noakes, B.
Clement-Jones, L. Northesk, E.
Colwyn, L. Northover, B.
Condon, L. Norton of Louth, L.
Cope of Berkeley, L. [Teller] Oakeshott of Seagrove Bay, L.
Craigavon, V. O'Cathain, B.
Crickhowell, L. Park of Monmouth, B.
Dholakia, L. Phillips of Sudbury, L.
Dixon-Smith, L. Platt of Writtle, B.
Dundee, E. Plummerof St. Marylebone, L.
Eden of Winton, L. Quinton, L.
Elton, L. Rawlings, B.
Erroll, E. Razzall, L.
Reay, L.
Ezra, L. Redesdale, L.
Fookes, B. Rees, L.
Fowler, L. Rees-Mogg, L.
Freeman, L. Rodgers of Quarry Bank, L.
Geddes, L. Roper, L.
Glentoran, L. Seccombe, B. [Teller]
Goodhart, L. Selsdon, L.
Goschen, V. Sharp of Guildford, B.
Hanham, B. Shaw of Northstead. L.
Harris of Richmond, B. Simon of Glaisdale, L.
Hayhoe, L. Skelmersdale, L.
Higgins, L. Skidelsky, L.
Hodgson of Astley Abbotts, L. Swinfen, L.
Howe, E. Taverne, L.
Howe of Aberavon, L. Taylor of Warwick, L.
Howe of Idlicote, B. Tebbit, L.
Howell of Guildford, L. Tenby, V.
Hurd of Westwell, L. Thomas of Gresford, L.
Jacobs, L. Thomas of Gwydir, L.
Jenkin of Roding, L. Thomas of Swynnerton, L.
Jopling, L. Thomson of Monifieth, L.
Kingsland, L. Trumpington, B.
Laing of Dunphail, L. Wakeham, L.
Laird, L. Watson of Richmond, L.
Laming, L. Weatherill, L.
Livsey of Talgarth, L. Wilcox, B.
Lucas, L. Windlesham, L.
Acton, L. Boothroyd, B.
Ahmed, L. Borrie, L.
Amos, B. (Lord President of the Council) Brennan, L.
Brooke of Alverthorpe, L.
Andrews, B. Brookman, L.
Bach, L. Campbell-Savours, L.
Bassam of Brighton, L. Carter, L.
Berkeley, L. Christopher, L.
Blackstone, B. Clarke of Hampstead, L.
Blood, B. Clinton-Davis, L.
Corbett of Castle Vale, L. Lea of Crondall, L.
Crawley, B. Levy, L.
Davies of Oldham, L. [Teller] Lockwood, B.
Dean of Thornton-le-Fylde, B. Macdonald of Tradeston, L.
Dixon, L. McIntosh of Haringey, L.
Donoughue, L. McIntosh of Hudnall, B.
Dubs, L. Mackenzie of Culkein, L.
Evans of Temple Guiting, L. Massey of Darwen, B.
Falconer of Thoroton, L. (Lord Chancellor) Merlyn-Rees, L.
Mitchell, L.
Farrington of Ribbleton, B. Moser, L.
Faulkner of Worcester, L. Ouseley, L.
Finlay of Llandaff, B. Pitkeathley, B.
Gale, B. Rea, L.
Gibson of Market Rasen, B. Rendell of Babergh, B.
Goldsmith, L. Rooker, L.
Gould of Potternewton, B. Sainsbury of Turville, L.
Graham of Edmonton, L. Sawyer, L.
Grenfell, L. Sewel, L.
Grocott. L. [Teller] Sheldon, L.
Harrison. L. Simon, V.
Haskel, L. Temple-Morris, L.
Hayman, B. Triesman, L.
Healey, L. Turnberg, L.
Hilton of Eggardon, B. Turner of Camden, B.
Hollisof Heigham, B. Warner, L.
Howells of St. Davids, B. Warwick of Undercliffe, B.
Hughes of Woodside, L. Whitaker, B.
Hunt of Kings Heath, L. Whitty, L.
Irvine of Lairg, L. Wilkins, B.
Jordan, L. Williams of Elvel, L.
Layard, L. Woolmer of Leeds, L.

On Question, amendments agreed to.

Resolved in the affirmative, and amendment agreed to accordingly.

4.31 p.m.

Clause 2 [Constitution of NDA]:

[Amendment No. 3 not moved.]

Schedule 1 [The Nuclear Decommissioning Authority]:

[Amendment No. 4 not moved.]

Clause 3 [Designated responsibilities]:

Lord Dixon-Smith moved Amendment No. 5: Page 3, line 11, at end insert— () where the primary purpose of a designated installation has been the generation of electricity, to ensure that the decommissioning does not preclude the future use of the site for the generation of electricity;

The noble Lord said: My Lords, I suspect that the Minister will be glad to move into somewhat calmer waters. Clause 3 sets out the principal functions of the Nuclear Decommissioning Authority. I will begin simply by reading the start of Clause 3(1) The principal function of the NDA shall be to have responsibility for securing—

  1. (a) the operation, pending the commencement of their decommissioning, of designated nuclear installations;
  2. (b) the decommissioning of those and other designated nuclear installations;
  3. (c) the cleaning-up of designated nuclear sites".

My concern is that, at some point in the future, electricity generation in power stations will be required to be constructed in this country. It is never uncontroversial to put in a planning application for a power station. Where we have existing power stations that are going to be decommissioned, in planning terms there is an existing user, so that another generating station, not necessarily nuclear—it could be gas or coal—could be constructed on that site without causing any planning difficulties. This would therefore be a prudent step. There are also other reasons: all the infrastructure is already there; the high-powered transmission lines are there—they do not have to be run across new areas of countryside, as I heard from my noble friend earlier in the debate. So there are very positive reasons why we should secure that situation.

One has to make a good many assumptions in this amendment before one gets to this situation. We do not know from the Bill how far the decommissioning process will go. There is the whole question of the future of the sites and of the communities around, all of which are mentioned subsequently in the Bill. When British Steel, for instance, was running down, I well remember that it invested enormous sums in bringing new industries into former steel communities in order to diversify their economies and to replace the steel industry. It had government help for that, of course. I infer that there will be a similar process.

The amendment does not call for action by the Government but it does call for thought. It may be that, in the future, new generating plant will be more sensibly sited, close to major urban areas, where not only will they generate electricity but the heat that they use in the generation can be piped off and used by the community, instead of being run out to sea or cooled down in cooling towers. We have not reached that stage.

Lord Brookman

My Lords, I could not help but rise to make a comment about the steel industry. The noble Lord is correct in saying that tremendous help was given to communities at the time of the steel closures, but that was also part of the European Coal and Steel Community funds. European funds played an enormous part in helping those troubled areas. The Conservative government stopped us being members of that fund because it required government support, as well as a levy from employers.

Lord Dixon-Smith

My Lords, I am grateful for being pulled up over the European Coal and Steel Community, but that does nothing to weaken the argument. In fact, it supports it.

Planning will always be a controversial matter, where energy supply is concerned. The Minister probably knows better than anybody that generating plant and transmission lines are immensely difficult to slot in across the country, despite the rather easier regime that they appear to enjoy in Scotland, for whatever reason. I hope that the Minister will assure me that I need not be concerned about the matter and that the decommissioning process would not go so far as to rule out the possibility that the sites might subsequently be available for the generation of electricity in whatever form the times required, when the situation arose. If the Government can give me some assurance on that, I may be freed of the obligation to press the amendment, which would relieve me enormously. I beg to move.

Lord Maclennan of Rogart

My Lords, may I say how welcome is the debate stimulated by the amendment? In the community of Caithness around the establishment of Dounreay, there is some concern that the tight focus on the decommissioning of the site by the Nuclear Decommissioning Authority to restore it to a greenfield situation may mean that we miss an important opportunity to develop there or close to it and under the umbrella of one management alternative energy sources that are proximate.

The north Caithness coast is already viewed as a potential location for experimentation with tidal power and wave power. One experiment proved abortive, but it took place. It would be a great mistake if the technological facilities and skills in the area and the physical location, along with the availability of transmission lines, which the noble Lord, Lord Dixon-Smith, mentioned, were not considered as a source for experimentation and for the development of alternative energy. It would be unfortunate if the principal function of the NDA is to be regarded as excluding responsibility for that kind of development. Partnerships may be appropriate for the development of such alternatives. It would seem desirable that the NDA should have a responsibility not to preclude those developments. I hope that the Minister will find the opportunity during the course of the debate to clarify how he and the Government see the position.

Earl Caithness

My Lords, I support my noble friend Lord Dixon-Smith on this amendment, particularly in view of what has just been said by the noble Lord, Lord Maclennan of Rogart, who knows the Dounreay situation better than I. He has put the matter in a far better way than I could. It is a crucial issue for the north of Scotland where there is good access to the grid system. It takes me back to a point raised on earlier amendments. It took a long time for it to dawn on people in Caithness, which is a fairly flat landscape, that one of the problems of wind farms, although extremely beneficial in many areas, is connecting them to the grid. Where one has a site which is part of the base of the grid it would be foolish not to give it flexibility for use in the future.

I wish to ask the Minister two questions. I gave him notice of one of them in connection with Amendment No. 3, but as the noble Lord did not move it, I told him that I would raise it on Amendment No. 5. Before I do so, I wonder whether the noble Lord would like to comment as to whether one of the designated responsibilities of the NDA should be to make a centre of excellence for decommissioning. If that is the case, would it not be right that the centre should be at Dounreay where the decommissioning process is going to the front of modern technology which can then be sold and distributed around the world for the benefit of all?

The second point I mentioned to the Minister concerns the constitution of the NDA and whether further thought has been given as to the members of that organisation and whether in particular there will be a representative from Caithness who know Dounreay well. It is the second largest establishment and given the contribution it has made and the expertise there, it would be extremely wise of the Government to include somebody with knowledge of that area.

Lord Monro of Langholm

My Lords, I wish to add briefly to what the noble Lord, Lord Maclennan, said. I live very near the plant at Chapel Cross, about two miles away, and I have been there throughout the life of the plant. What may happen there is exactly what may happen at Dounreay. There is very good reason that we should look to securing the site for possible future reactors. There is a tritium plant at Chapel Cross, but whether that can operate without a nuclear reactor I am not technically knowledgeable to say. We want to keep these sites available until final decisions are made about nuclear reactors. That is why I support the amendment.

Lord Davies of Oldham

My Lords, I hope to reassure the noble Lord, Lord Dixon-Smith, on the main thrust of his amendment that nothing precludes the NDA from pursuing a policy where a site would be designated in the way he identified. The Bill does not preclude any decision in those terms. It is open in that respect. Therefore, if a particular site appeared as though it should be preserved for nuclear generation that may well be so. The Bill does not preclude it and that is why the amendment is unnecessary.

I am in greater difficulty in responding to what I recognise are the extremely precise representations as regards Dounreay. The noble Lord, Lord Maclennan, would not be his true self if he participated in a debate of this kind without representing that area, which he has done in another capacity for so many years. I recognise the significance of the point that he made. Obviously, the Nuclear Decommissioning Authority will be a centre of excellence. It will pursue a strategy that will require an enormous amount of expertise at the highest levels that we can command. There is no decision about where the NDA will be located at this stage. We could not possibly think in terms of putting that in the Bill. However, the representations of the noble Lord and those of the noble Earl, Lord Caithness, have been heard.

I will make an obvious point: we are not expecting local representation on the NDA. We are expecting expertise and it may be—as I am sure both noble Lords would contest—that there is a level of expertise at Dounreay that would be enormously advantageous to the NDA. That may well prove to be the case, but I am not in a position to pre-judge any decision now. However, we do not look upon the NDA as having a board that is representative of local communities that may have experience, expertise and a long association with nuclear generation.

I turn to the question of whether it is advantageous for certain sites, which have been the centre of significant power generation in the past, to be preserved with a perspective on the future. The overall policy with regard to the NDA leaves that option entirely open. That is exactly the line that it may take with regard to a particular site. There is nothing in this Bill that precludes the NDA having that perspective. That is why, in a real sense, the amendment is unnecessary. There are no statutory constraints on what the end point might be in terms of the NDA's objectives. Objectives are, in any case, subject to ministerial approval. If the Minister had an opinion in his or her wisdom about the preservation of the site in the terms expressed in the amendment and in the way in which the noble Lord presented his position, the NDA would take that case on. The decisions will be taken on a site by site basis having due regard to the obvious points of government policy to which we have already attested.

I hope that the House forgives me if I dare to tread upon the two long debates that we have already had, but I wanted to emphasise the obvious fact that the Secretary of State has clear responsibility, as does Ofgem, for ensuring electricity security over a long period of time. We will live to see whether that follows the lines that some noble Lords have suggested in previous debates. I assure the noble Lord that nothing in the way in which the Bill is drafted in any way inhibits the basis of the arguments that he has put forward in his amendment.

4.45 p.m.

Baroness Byford

My Lords, before the noble Lord sits down, I listened carefully when he said that nothing precluded the NDA from doing exactly what my noble friend wanted. However, having read through the relevant pieces, I cannot see where it encourages that either. Perhaps the Minister can point me in the right direction.

Lord Davies of Oldham

No, my Lords, because we have not set out to detail all the potential objectives that the decommissioning authority might have with regard to the significant number of sites with which it has to deal. I mentioned that they are to be dealt with on a site by site basis. The kind of arguments that have been advanced so ably by the noble Lord, Lord Maclennan, are not arguments that would easily be adduced in favour of one of two other sites that I can think of in the country. The value of that representation is to identify its uniqueness. I am merely saying that, on the face of this Bill, we are not setting out to be specific about the NDA's objectives. We are saying that, within those broad objectives, this could certainly be one in relation to any particular site.

Lord Dixon-Smith

My Lords, I think I am grateful to the Minister for his reply, and the reason I think that is something I shall come to. I should make it very plain that I was careful not to mention the word "nuclear", in my remarks because, if developments go on, it may well be possible to avoid using these sites for nuclear, and they may be required for some other form of generation. That is my first point: we should get right away from the nuclear issue.

My second point is that if one looks at the history of the rundown of major industrial sites, by and large they soon began to develop some other industrial use on them. I can well conceive that some of these sites would be very attractive to other industries. There would also be reasons for the Government to try to persuade industry to locate on those sites if they were otherwise vacant. For a start, there is a site there that has a planning use. It could be shifted from electricity generation to industrial or whatever. The communities involved will obviously be looking to have their employment base changed, and it will be very tempting. So some of these sites should be used for other purposes.

Of course, I would be the first to recognise that what we are discussing with the Nuclear Decommissioning Agency is a programme of work that is going to go on for 10, 20 or 30 years. None of us can predict exactly what is going to happen in that time. We cannot say what the pressures will be, what other developments there will be, and so on. I entirely accept the Government's position that they should not prescribe this at this point. That is fair enough. But we should recognise as a matter of reality that, as a site is closed down and decommissioned, it will very tempting to try to move other employment into that place relatively quickly. It might be that the strategic need is for the site to stay vacant for a few years, but there will be pressure to get it into some other use. So I am half, but not totally, reassured by what the Minister said. It will come back to a lot of factors in the reports that we are now going to call before Parliament annually, as a result of previous amendments. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Attlee moved Amendment No. 6: Page 3, line 15, after "disposal," insert "including long term disposal

The noble Earl said

My Lords, I move this amendment on behalf of my noble friend Lady Miller. There is some confusion outside your Lordships' House, and even down the other end of the corridor, about the NDA. Some believe that the NDA will be responsible for final disposal of all radioactive waste. As drafted, the Bill does not provide for that. This amendment proposes that the NDA will be responsible for final disposal. Some mischievous noble Lords—perhaps the Minister might suggest that my concerns are predicated upon the needs of new nuclear build. Of course, they are absolutely right. Equally, the noble Baroness, Lady Miller of Chilthorne Domer, is not naive in supporting me, because there are other very good reasons for making progress on the final disposal of nuclear waste.

First, post 9/11, it is no longer safe to keep waste on the surface, in temporary storage and vulnerable to attack. Even some environmental NGOs recognise that. Secondly, I believe that there is a risk of societal breakdown, possibly because of the rapid onset of a biological disaster. If that happened, who would look after the facilities at Sellafield? How would a future primitive society identify the risks of what we have negligently left behind? That would not be a pleasant leaving present.

At Second Reading, I suggested that the issue of nulcear waste had been put into a deep geological depository. Ministers have given CoRWM, the Committee of Radioactive Waste Management, the mission to report on the options by the end of 2005. I understand that the committee has exceeded all Ministers' expectations and that it now intends to report at about the end of 2006.

Why the delay? As your Lordships would expect, the committee has undertaken a very rigorous examination of all—I repeat, all—the possible options. For instance, the committee will examine the option of launching and ejecting the waste into space. The 1999 Select Committee of your Lordships' House, examining the management of radioactive waste, rejected the space option due to the obvious risk of launch failure. Your Lordships' Select Committee also rejected all other options, with the exception of deep geological depository.

The amendment does not provide for deep geological depository but merely gives NDA responsibility for longterm disposal. I believe that CoRWM is designed to create unnecessary delay by examining every disposal option, even those that are not remotely viable. I have asked this question before, but I shall repeat it. Can the Minister identify any option other than deep geological disposal that does not have insuperable difficulties? It may be that very careful independent analysis shows that deep geological depository is not viable either, but it is the only option that we know about that is without obvious defects at the moment. However, that does not mean that it is necessarily perfect. There may be insurmountable difficulties. If so, we need to find out quickly not slowly, because the implications for the NDA are very serious indeed. That is why the NDA is best placed to manage final disposal. I beg to move.

Baroness Miller of Chilthorne Domer

My Lords, I rise briefly to support the amendment. I do not believe that the Bill adequately defines "disposal", and long-term disposal is the crunch issue for nuclear waste. It is very important to define in the Bill, as suggested by the amendment, exactly what the NDA will be responsible for when it comes to the word "disposal". For that reason, I support the amendment. We cannot have any more short-termism or any more waste stored without planning permission on sites throughout Britain. We need to consider a long-term solution, difficult though that is, and the NDA will be the body best placed to do that.

Lord Jenkin of Roding

My Lords, I have collected a mass of material about what other countries are doing in this respect, but it will please the House to know that I do not propose to say anything about that. Before CoRWM reports, at the end of next year, will it have covered what is being done in such countries as Japan, Sweden, Finland, France and the United States, all of which seem much further ahead with this matter than we are? I entirely agree with the noble Baroness, Lady Miller of Chilthorne Domer, that it is now incumbent on the Government to get ahead with this. They had the report some years ago from the House of Lords Select Committee, and it is a signal of lack of will that nothing has been done so far except to continue to report. We must get this dealt with.

Lord Campbell-Savours

My Lords, I hope that my noble friend the Minister rejects the amendment fiercely, because all that it will do is to take us right down the Nirex route, which on a previous occasion proved so utterly disastrous.

Lord Davies of Oldham

My Lords, I reassure my noble friend that I shall propose that the amendment should be withdrawn, although not in quite such cataclysmic terms perhaps. I respect the motivation of the noble Earl, Lord Attlee, in introducing the amendment. I assure him of the absolute cardinal point, addressed by both him and the noble Baroness, Lady Miller of Chilthorne Domer, that "disposal" means "the act or means of getting rid of something". That is its usual meaning, which certainly embraces the long term as much as it embraces the short term. In the nuclear context, this means that there is no intention subsequently to retrieve what has been disposed of. So in the terms of the Bill, disposal is, by its very nature, a long-term solution. This is contrasted with the word "storage" that we use elsewhere in the Bill to indicate an interim solution before further treatment or disposal. Disposal is the long-term concept. That is why I hope that the noble Earl will recognise that his amendment is not necessary because it does not add any substance to the Bill.

5 p.m.

Baroness Miller of Chilthorne Domer

My Lords, will the Minister say whether spent plutonium is included among the substances that will be considered for long-term disposal? Is it classified as waste? Will it therefore fall within the long-term disposal solution that the Minster has just mentioned?

Lord Davies of Oldham

My Lords, we are referring to high-level waste for treatment. I recognise the chiding given on more than one occasion by the noble Earl, Lord Attlee, and the noble Lord, Lord Jenkin, about aspects of the time-scale on which we have made progress. The House will know that the committee is due to report in 2006. I can assure noble Lords that the Government expect it to comment upon international dimensions. We believe that we could usefully learn lessons from Finnish activity in this area. We expect the fullest range and quality in the report and have every confidence that it will be so. The committee is due to report in 2006.

On the general issues that have been raised, the noble Earl, Lord Attlee, asked me to be a little more explicit about which strategies might be pursued. I am not in a position to do that. I would prefer to wait for the deliberations of the committee. Secondly, it would be an extraordinarily slender thread on which to hang such a substantive debate. I would be asking the noble Lord, Lord Jenkin, to forsake his resolution not to dwell at great length on these issues in this amendment. I know he could do so with good effect, but it would not be appropriate here. I hope that the noble Earl will forgive me for not pursuing that route at this time. But I assure him that when we refer to disposal in this part of the Bill, we are taking account of very long-term, strategic, complex and important issues about how we deal with the issue of high-level waste.

Lord Maclennan of Rogart

My Lords, before the Minister sits down, will he clarify something? I was surprised that he suggested that there was no need to have this amendment because disposal included longterm disposal. In that case, is he saying that there will be no need to create new institutional arrangements for handling long-term disposal separately if that is a recommendation of the committee that is currently sitting? Will the Government simply pass the committee's recommendations to the NDA to give effect to them if they agree with the recommendations?

Lord Davies of Oldham

My Lords, I think that the noble Lord might be presuming too much in those terms. He will recognise that these are challenging and difficult issues. That is why the committee is one of the longer lasting committees. It has developed its deliberations over almost a decade. I was merely seeking not to pre-empt any position with regard to it. As far as the Bill is concerned, I reassure the noble Lord that what we mean by disposal will not inhibit the responsibility of the NDA in any way. Therefore, we do not need the amendment that spells out responsibilities in this slightly more extended way.

Baroness Miller of Chilthorne Domer

My Lords, I did not actually hear the Minister's response as to whether or not spent plutonium was a substance covered within the designation of disposal or longterm waste.

Lord Davies of Oldham

My Lords, I understand that plutonium is not currently classified as waste. The noble Baroness asked me quite specifically whether it was in the category. It is not.

Lord Jenkin of Roding

My Lords, the Select Committee recommended that a decision should be taken as to how much plutonium would be needed for future use and that the rest should be designated as waste. That responsibility rests upon the Government.

Lord Davies of Oldham

My Lords, I understand that. I am not able immediately to verify that position. However, I am grateful to the noble Lord for indicating that plutonium could fit into two categories.

Earl Attlee

My Lords, before the Minister sits down, is he content for surface waste to stay there at Sellafield indefinitely?

Lord Davies of Oldham

My Lords, no. I am as anxious as everyone in the country is for us effectively and adequately to solve these difficult problems. However, because the issues are so difficult the noble Earl will recognise why it would be superficial in the extreme for me to make some kind of gesture of response to a question of that magnitude at this moment.

Baroness Miller of Chilthorne Domer

My Lords, before the Minister sits down, will he be in a position by Third Reading to say what proportion of spent plutonium will be classified by the Government as waste?

Lord Davies of Oldham

My Lords, as the noble Lord, Lord Jenkin of Roding, indicated with his helpful intervention, as we have not yet taken such a decision, we have not yet decided on the proportion.

Earl Attlee

My Lords, I am grateful to all noble Lords who have taken part in this short debate. The noble Lord, Lord Campbell-Savours, mentioned the problems of Nirex. The Select Committee touched on that and recommended a long period of public education about the problems of waste disposal. I am not very happy with the Minister's answer. I do not propose to test the opinion of the House because we need to make progress on other matters. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon moved Amendment No. 7: Page 3, line 18, at end insert— through the employment whenever reasonably possible of appropriately qualified and experienced persons having regard to the safety, health and environmental expertise of those persons

The noble Baroness said: My Lords, I shall deal with Amendments Nos. 7 and 15 together. I shall do so briefly. When I moved them in Grand Committee with the support of the other opposition party I pointed out that I found it strange that in all the directions given to the NDA, the Bill does not require the NDA to have regard to the importance of a strong safety culture among companies competing for and receiving contracts, or individuals seeking senior managerial positions.

I do not intend to repeat the same arguments that I used in Committee. I thought that they were self-evident but obviously not. The reply of the noble Lord, Lord Davies of Oldham, was far from satisfactory. He failed to give me any assurance that the all-important culture of safety would be impressed upon the NDA and more particularly that it would be the responsibility of the NDA to ensure that those to whom it awarded contracts and those to whom it delegated its duties were all duly qualified.

The noble Lord told us about the general duties of the NDA as specified in Clause 9(1). That is okay as far as they go. However, what needs to be explained is the objection to spelling out this important facet—-the employment of suitably qualified persons in an area where safety is a matter of serious public concern.

What we do not want to see is some serious accident, however small, followed by crocodile tears from the Minister and the regulator. We do not want to see an exercise in buck-passing by the Government and the regulator on "failures in management", capped by the usual promise, "we will learn useful lessons from this".

No one can get a job as a doctor, as an airline pilot, as a bus driver, or any other skilled job, without having the necessary qualifications. It is essential that in this field we are protected by the NDA. That body should have the responsibility for seeing that only qualified persons are employed. There can be no possible logical or reasonable objection to this duty being made abundantly clear on the face of the Bill. I beg to move.

Noble Lords

Hear, hear!

Lord Triesman

My Lords, I thank noble Lords profoundly for such a warm reception.

Amendments Nos. 7 and 15 impose an additional requirement on the NDA to employ appropriately qualified persons in respect of its principal functions, although as drafted the amendment would in fact apply only to the decommissioning NDA facilities in Clause 3(l)(f)). There is a corresponding addition to the NDA's duties in this regard.

I hope that the noble Baroness, Lady Miller of Hendon, will not take offence at what I am about to say, as certainly none is intended. As I think that she may have hinted, the amendments do not—I went back over what was said on 15 January—say anything about the duties of the contractors. They are limited to the responsibilities and duties of the NDA in relation to the health, safety and environmental record of site management contractors. It is right to ensure that people are properly qualified to do the work and have the ability to do it. No one would want anything else to be the case. It must be an extremely important part of the competitive tendering process for the NDA to make an assessment of the viability of the bidders for site management contracts in these terms—it would be negligent were it not to do so—especially whether the environmental and safety record of potential contractors will meet the strict terms of a nuclear site licence. There will no doubt be informal contact between the NDA and regulators on this matter, and the regulators will certainly play a significant role in the licensing of the successful bidder. It is the regulators who will need to agree any change in the organisational arrangements at nuclear sites under the terms of the licence, which in terms of safety is specifically covered by the Nuclear Installation Inspectorate's licence condition 28.

Clearly, the NDA will want as much comfort as possible that a contractor it is minded to appoint will be acceptable to the regulators. It is hard to imagine the process going ahead were it to do other than that. This is addressed in the memorandum of understanding which will be put in place between the NDA and each regulator, and which has been agreed in generic form as a draft document. But the regulators will not want to be drawn into a detailed consideration of the merits of individual bidders in advance of the selection of a preferred contractor by the NDA which might compromise their independence in sanctioning the organisational change which would be necessary on the appointment of a new contractor.

Finally, the NDA is also under a duty to ensure that it has the necessary expertise in place, now and in the future, so that it can successfully carry out its decommissioning task. Specifically Clause 9(2)(a) puts the NDA under a duty to ensure the maintenance and development of a skilled workforce able to undertake clean-up. But that is a means to an end. The NDA's role will be to set the strategic direction for clean-up across the UK, manage the framework for delivering it and ensure the necessary conditions are in place for it to be carried out successfully.

So in the final analysis it is not just a matter of employing the right sort of people, although we expect this to be a very important element, and enshrined in ways which I hope I have persuaded noble Lords are present. For the step change in nuclear clean-up we are seeking to achieve, we cannot detract from the NDA's focus on actually delivering on clean-up.

It is, of course, essential that the NDA's contractors have the appropriate credentials in this respect. It will be one of the acid tests for involvement in nuclear clean-up. Indeed, not being appropriately qualified to do the job is simply not an option. All bidders will have to show that they can meet the requirements of the nuclear site licence, and if they cannot do so they will be excluded.

I urge noble Lords to think about what I have said about withdrawing these amendments. We accept the need for the kinds of expertise and ability that the noble Baroness laid out in her proposals on this amendment. We believe that all the conditions that she seeks to achieve arc already in the legislation, the documents and the memoranda to which I have referred.

5.15 p.m.

Baroness Miller of Hendon

My Lords, I thank the noble Lord for that fuller answer. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon moved Amendment No. 8: After Clause 3, insert the following new clause— Confidentiality (1) The Secretary of State shall exclude—

  1. (a) from what he lays before Parliament and publishes under any Part of this Act, and
  2. (b) from what is to be laid before the Scottish Parliament, any of the material referred to in subsection (3) of this section.
(2) The NDA shall exclude from any report that it is required to make public any of the material referred to in subsection (3) of this section, but nothing in this subsection shall entitle or require the NDA to withhold from the Secretary of State any information which he is reasonably entitled to require to be disclosed to him or which he may require to be disclosed in confidence or for the purpose of the performance of his duties under this or any other Act. (3) The material referred to in subsections (1) and (2) is any of the following—
  1. (a) anything, the publication of which (otherwise than under any enactment) would constitute a breach of confidence by any person;
  2. (b) anything which constitutes a trade secret;
  3. (c) anything which would be prejudicial to the commercial interests of any person.
(4) In relation to any information which the NDA is entitled to have disclosed to it under any Part of this Act and which the NDA considers that the requirements of this Act, and in particular Schedule 3, would require it to disclose to any other person (otherwise than under any enactment) anything which would normally either constitute a breach of confidence by any person or the disclosure of a trade secret or which would be prejudicial to the commercial interests of any person—
  1. (a) the NDA shall consider whether the disclosure of such information is strictly necessary in order to fulfil such requirements and shall not disclose the information unless it is strictly necessary; and
  2. (b) the NDA shall not disclose the information unless or until the person to whom it is disclosed has agreed to be bound by confidentiality obligations in substantially the same terms as those which are binding on the NDA in relation to the information, and otherwise shall exclude it from disclosure."

The noble Baroness said: My Lords, this amendment, which deals with confidentiality, is grouped with Amendment No. 26 and Amendments Nos. 31 and 33, which are government amendments.

I have read those government amendments carefully. Although they do not cover every point exactly, both we and the companies involved would be satisfied with them. I intend to listen to what the Minister says on those amendments, and if necessary we will not press them. I beg to move.

Lord Whitty

My Lords, I am grateful to the noble Baroness for giving me the opportunity to explain the later amendments. There was considerable discussion on the issue of confidentiality in this and other contexts in the Grand Committee, and the Government recognise that there are concerns here.

Although we consider that a number of these issues cart be dealt with by contract rather than by legislation, we have brought forward our own amendments to address those valid concerns.

Our amendments relate to the exclusions that the Secretary of State can make in respect of the publication of the NDA's annual report, and the NDA in respect of the publication of its strategy and annual plan. The key differences between our approach and that of the noble Baroness, Lady Miller of Hendon, are that our amendments are targeted on the publication of documents, for which, under provision of the Bill, the requirements of disclosure might otherwise outweigh the contractual protections.

The information to be protected relates to information in respect of an individual, or body of persons, which would "seriously and prejudicially affect" their interests.

That is necessary because there has to be a balanced test on whether the information should be disclosed. The amendments would enable the Secretary of State and—subject to a suitable cost/benefit analysis—the NDA, to decide that the information should be disclosed. This is an important dimension.

The NDA and the Secretary of State need to be able to make a decision in favour of disclosure where they consider it necessary. Because of the general provisions of these amendments, such decisions would be taken only with the greatest care and would not detract from the NDA's financial and natural responsibility to stand behind site companies, should they be exposed to claims for damages as a result of the site licensee providing the information required.

As a consequence of discussions that we have had with both the NDA and the companies concerned, we believe that they are now reasonably happy that the Government's amendments meet at least the bulk of their requirements. They have probably conveyed that view to the noble Baroness as well.

Our amendments meet the main anxieties previously expressed here, and those of the companies themselves.

Baroness Miller of Hendon

My Lords, I have listened carefully to the Minister. That is what I thought his amendments meant when I first read them. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer moved Amendment No. 9: After Clause 3, insert the following new clause—

"PRINCIPAL DUTIES OF THE NUCLEAR DECOMMISSIONING AUTHORITY (I) It shall be a principal duty of the NDA, in carrying out its functions, to have particular regard to each of the following—

  1. (a) relevant Government policy;
  2. (b) the need to safeguard the environment;
  3. (c) the need to protect persons from risks to their health and safety from activities involving the use, treatment, storage, transportation or disposal of hazardous material;
  4. (d) the need to preserve nuclear security;
  5. (e) the need to promote, and to ensure, the maintenance and development in the United Kingdom of a skilled workforce able to undertake the work of decommissioning nuclear installations and of cleaning up nuclear sites; and
  6. (f) the need to secure the adoption of what it considers to be good practice by the persons with control of designated installations, designated sites and designated facilities."

The noble Baroness said: My Lords, the amendment moves towards the front of the Bill what the Government have in the Bill as drafted "general duties" of the NDA at Clause 9. Here they are made the principal duties of the Nuclear Decommissioning Agency.

We moved the amendment in Committee and the Minister's reply prompted us to return to the matter on Report. We believe that the principal duties of the Nuclear Decommissioning Agency should be laid down in legislation. Yet the Minister, in reply on 15 January, said that the proposed new clause was more or less a mission statement laying down the objectives of the NDA. He went on to say: It is not appropriate to cover a mission statement in legislation. It will properly be for the NDA itself, once established, to determine how it will frame its objectives in line with legislation".—[Official Report, 15/1/04; col. GC 138.] I believe that it is for the legislation to lay down the objectives for the NDA. I am grateful to the noble Baroness, Lady Miller of Hendon, and the noble Lord, Lord Jenkin of Roding, for adding their names to the amendment.

It is of critical importance that the NDA has clear principal duties. Besides those laid down as general duties, we have added two more in paragraphs (e) and (f) so that in its principal duties it shall have all the important aspects which it can go on to draw out for itself as a mission statement. At least the legislation refers to those important duties so that the NDA can check that it is going in the right direction.

I hope that between the Committee and Report stages the Government have had time to reflect on the importance of legislation laying down an organisation's objectives. I hope that the noble Lord, Lord Whitty, who replied in Committee, will today be able to tell me whether it is the practice for public bodies to frame their own objectives. In Committee he said that it was, but that surprised me. Perhaps it goes some way to explaining why public bodies do not always seem to have the focus we believe they should. I believe that objectives should be framed for public bodies so that they are extremely clear on what they are supposed to be achieving. I beg to move.

Baroness Miller of Hendon

My Lords, I support the amendment. The focus and importance of Amendment No. 9 is reflected in its new position in the Bill after Clause 3. I can see no problems that the Government may have with it. Paragraphs (a), (b), (c) and (d) in the amendment and in Clause 9 of the Bill are the same. Paragraphs (e) and (f) appear in subsection (2)(a) and (c) of Clause 9. There is nothing new and we have tabled the amendment to demonstrate its importance and focus at an earlier part of the Bill.

Lord Jenkin of Boding

My Lords, the origin of putting such objectives into a Bill came from the Select Committee in another place. I confess that when the noble Baroness, Lady Miller of Chilthorne Domer, moved the amendment in Grand Committee and I listened to the Government's reply, I had more sympathy with the Government. Her amendment reflected what the other place had said, but it was not an appropriate addition to the Bill. But, as my noble friend Lady Miller, has now said, this is a different situation. It is useful for those duties to be given such prominence in the amendment and I hope that the Government will feel able to smile upon it. I was happy to add my name to it.

Lord Triesman

My Lords, I am sure that all Members of your Lordships' House will understand the reasoning that lies behind the amendment and the arguments put in support. We discussed the matter in some detail—admittedly in a somewhat different format—when we looked at the restructuring of the Bill in response to the noble Lord's preference to give greater prominence to some of the NDA duties currently found in Clause 9.

I hope that my reasons will be cogent, but we stand by the position set out by my noble friend Lord Whitty at that time. From their comments, it would seem that noble Lords have read Hansard on the matter, so I shall not repeat all of the arguments made by my noble friend on 15 January. I shall pick out what I believe are the key points.

A clause of this kind would be unusual. We have tried in the Bill to make clear what public bodies are expected to do in the following way: public bodies have functions and the proposed legislation sets out the functions of the NDA—decommissioning and cleanup. The Bill then sets out the duties that flow from those functions and how they should be carried out. The more over-arching statement—the objectives that are the NDA's functions—is set out in Clause 3. That follows a pattern of expression and a structure of legislation that is common for public bodies. In that sense, this one is no different.

The Bill has been structured in such a way for good reasons. Clause 3 sets out those principal functions and Clauses 4, 5 and 6 are intimately related, because they identify the additional functions and provisions relating to the designation process. Once a principal function in respect of a site, installation or facility is identified under Clause 3, additional functions are attached to the designation under Clause 4. The process of designation is carried out and the duties of the NDA follow that.

I ask noble Lords to consider that those clauses be taken as a whole. If a clause on duties is inserted into the group, we are fearful that it may be confusing, despite the undoubted intention to make the matter clear. I hope that noble Lords will accept that point on the location of such a clause. We are left to consider whether the clause proposed should be inserted somewhere else in the Bill—most obviously after all of the provisions on functions, which run to Clause 8 and before Clause 9.

When considering the principal functions set out in Clause 3, it is not clear what the effect would be of the concept of the "principal duties" proposed in Amendment No. 9. For example, is the NDA to pay less heed to the remaining general duties left in Clause 9? As a distinction, that would create an unnecessary source of confusion. It is important that all the duties are treated with equal seriousness, because duties are duties for a public body.

I understand the motivation of noble Lords opposite who seek greater prominence for what are, in some ways, the key considerations that should govern how the NDA pursues its functions. But I ask noble Lords to reflect on whether the amendment achieves that purpose. It confuses issues which, although important, arc matters that the NDA is only able to have regard to, rather than matters which we consider that the NDA should do itself. For example, the NDA is not responsible for setting government policy; it can only, as set out in the Bill, have regard to government policy. That is contrasted with the things which it can, and indeed should and must, do; for example, to promote and ensure the maintenance and development of a skilled workforce and to secure the adoption of good practice. Moving those duties into the "have regard to" category would, in practice, dilute their impact. All that would create greater confusion than is perhaps prudent, and I urge noble Lords to think carefully about that with a view to withdrawing the amendment.

5.30 p.m.

Baroness Miller of Chilthorne Domer

My Lords, I thank the Minister for his reply. I shall read it very carefully in Hansard because, at present, it does not seem to have given me a clearer indication of why a public body should not have its principal duties laid out in legislation in the way that we have proposed. I heard the Minister describe the process several times and I shall look carefully at the points that he made concerning whether having a principal duty to pay particular regard to something is weaker than having a general duty to do so. I do not believe that it is.

We may wish to return to this matter because, although, as the Minister said, this type of clause would be unusual in legislation, perhaps that is one reason that public bodies sometimes become unfocused—that is, legislation is not sufficiently clear about what their principal duties should be. Just because such a clause would be unusual is no reason not to consider it in this Bill. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 [Designations relating to Scotland]:

Lord Davies of Oldham moved Amendment No. 10: Page 6, line 23, at end insert— () gives it responsibilities not falling within subsection (2)(f) for the non-processing treatment or the storage of hazardous material the treatment or storage of which, in the discharge of those responsibilities, may take place in or on a site in Scotland;

The noble Lord said: My Lords, in moving Amendment No. 10, I shall speak also to government Amendments Nos. 19, 20, 24, 25, 29, 30 and 32 in this group. I hope to produce such compelling arguments that the noble Lord, Lord Dixon-Smith, will feel that he does not wish to move his Amendment No. 18 as and when it is reached. As he will have recognised, we are on something of a collision course with the government group of amendments and Amendment No. 18, which is in his name.

The settlement on devolution as regards nuclear matters set out in the Scotland Act 1998 is complex. Consequently, the provisions in the Bill are similarly complicated. As I mentioned in Grand Committee, the effect of the provisions has been subject to further detailed analysis because we discussed with our Scottish colleagues the significance of the provisions in the Bill. In the light of that analysis, it has proved necessary to propose these amendments to the Bill to ensure that the legislation properly reflects the mutually agreed position of the Secretary of State and Scottish Ministers.

In brief, the main circumstances which were found to be missing from the Bill were: first, the non-processing treatment or storage of hazardous material in Scotland, which is rectified by Amendment No. 10; and, secondly, proposals in the NDA's strategy or annual plan for the non-processing treatment, storage or disposal of hazardous material which would have an effect in or as regards Scotland. Those issues are addressed by Amendments Nos. 24, 25, 29 and 30. They are matters on which we believe Scottish Ministers should rightly be consulted, and the government amendments give effect to that provision.

In addition, Amendments Nos. 19 and 20 provide for the NDA to have regard to policies notified to it by devolved administrations and Amendment No. 32 requires the Secretary of State to consult Scottish Ministers before making directions on the matters which are to be covered by the NDA's annual report.

Noble Lords will recall that in Grand Committee the Government were probed on the arrangements in the Bill for the involvement of Scottish Ministers. The amendment tabled by the noble Lord, Lord Dixon-Smith, presses that issue further. I can confirm to the House that with the changes proposed by the Government, the Scottish Ministers have the appropriate powers of joint action over devolved matters and consultation over other matters which are reserved but which might impact on their devolved responsibilities. Therefore, the noble Lord will see from that argument, justifying the Government's amendments, why I hope that, in due course, he will not move Amendment No. 18. I beg to move.

Lord Dixon-Smith

My Lords, I am grateful to the Minister for his invitation. I shall not tell him my conclusion for a while; it will be nice to keep him in suspense. I was moved to table my amendment because of the way in which Clause 9, particularly subsection (4), is constructed. Clause 9 begins with the words, General duties when carrying out functions". That refers to the Nuclear Decommissioning Authority. It states: (1) It shall be the duty of the NDA, in carrying out its functions, to have particular regard to each of the following— (a) relevant Government policy". Subsection (4) states—I shall not read it all: In this section 'relevant Government policy' means all current policies which— (a) relate to the decommissioning of nuclear installations … and (b) have been published by or on behalf of Her Majesty's Government in the United Kingdom or a devolved administration". I shall now tell the Minister my conclusion. I believe that some words here do not need to be in the Bill at all. The clause refers to a "relevant government policy" published in the United Kingdom, but surely the devolved administrations are part of the United Kingdom. They are not separate nations; they are not separate states; and it seems to me that they cannot announce a relevant government policy. I certainly accept that the Scottish Parliament and the Scottish executive are to a large extent the government of Scotland, but they are not the government for the purposes of this clause, judging by the way in which it is constructed. I am absolutely sure that the Welsh Assembly cannot announce a relevant government policy. It seems to me that we cannot talk about it announcing a relevant government policy.

Those words are completely redundant. We need the clause to read "'relevant Government policy' means all current policies which have been published by or on behalf of Her Majesty's Government in the United Kingdom". That would cover the situation, particularly in the light of the other amendments that the Minister has just announced and which I am delighted to see. The Minister will be delighted to hear that I do not intend to press my amendment today because we are dealing with what I would call a battle of semantics. I seriously suggest, particularly in the light of the amendments that he has proposed, that that phrase is not necessary any longer and that the Bill would be better without it. It seems to me that it confuses the situation.

Lord Monro of Langholm

My Lords, following on from my noble friend Lord Dixon-Smith—he highlights how complicated this matter is—I want to put a couple of points to the Minister. First, does any issue in this clause or in the Bill require legislation in Scotland? The Scottish Executive seems to have been notoriously sluggish in carrying out legislation that affects Scotland when it also affects England and Wales. This can be noted particularly over foot and mouth. I do not know what happened in Edinburgh today. There is an argument about GM crops, that the Government have consulted and have taken steps to allow limited development in England, whereas the Scots have not yet agreed except on a voluntary basis. We will vote on it today. Much depended on whether the Liberal Democrats were going to support the Scottish Executive, because they seem to be doing so in Scotland if they disagree here at Westminster.

My second point, which follows on from that, is on the word "consultation", which is in Amendment No. 24 and elsewhere in these amendments, which I am glad that the Minister has put before the House. How far does consultation mean agreement? As the Bill is written at the moment, Ministers in England could inform Scottish Ministers what they intended to do, and could go ahead and do it. Does the Scottish Executive have a veto, or must agreement be involved? If so, why is the reference only to consultation and not also to agreement? We want to be clear on these points, because it is amazing how simple things like this can get blown up into almighty international situations. I hope that the Minister can clarify what I have put to him.

Lord Maclennan of Rogart

My Lords, like those noble Lords who have already spoken in this debate, I acknowledge the extraordinary complexity of the devolved arrangements. I simply wish to ask not how the Minister's conclusions have been arrived at, but what the practical impact is, particularly on the authority, if any, of the regulatory bodies in Scotland that are answerable to the Executive and not to the Secretary of State. I have in mind particularly the Scottish Environmental Protection Agency.

Baroness Byford

My Lords, before the Minister responds, I add my concern. I read carefully the amendments proposed by the noble Lord, Lord Whitty. Amendment No. 24 states: The Secretary of State must also consult the Scottish Ministers before approving". My noble friend Lord Monro of Langholm was right to raise the question of whether consulting means having an agreement, or just consulting, and whether the Scottish Parliament has the right to say "no". I speak briefly only to add weight to that argument, but certainly I do not think that the amendment proposed by the noble Lord, Lord Whitty, clarifies the position from where we were in Committee.

Lord Davies of Oldham

My Lords, as I indicated in my opening contribution, the issues are somewhat complex, and therefore I will have considerable difficulty in replying to the contributions that have been made in this short debate and in maintaining clarity. I will deal with the points of clarity first, and then I will try to meet some of the more difficult points later.

The question of consultation is obvious and best exemplified by the amendment that is concerned with the annual report. Consultation means consultation. It does not mean that the other side has a veto. It means that Scottish Ministers will be consulted about what should be contained in the eventual annual report. They do not have a veto on it, because they do not have parallel powers to the Secretary of State in that area. It makes sense that they should be consulted, and that is what the consultation areas of these amendments refer to.

Where the issues become more difficult is that the Scottish Administration, and the Scottish Parliament. have powers. We recognise that they have powers with regard to environmental protection. It would have been an odd state of devolution if we devolved issues to Scotland but we had not devolved environmental issues, so of course they have responsibilities with regard to the environment. The noble Lord, Lord Maclennan of Rogart, earlier invited me to consider the future of the community around Dounreay. The Scottish Administration and the Scottish Parliament will have considerable views on that, which would be taken into account by the NDA when it is involved in that site-by-site decision taking that we referred to in our earlier debates.

Clearly there are powers for the Scottish administration there, and these powers need to be taken into account and recognised by the NDA when it is involved in its crucial decisions on national policy. All that I sought to emphasise in the amendments that I have spoken to in this short debate is that in areas where it is appropriate that consultations should take place, the amendments will ensure that they do so; and in areas where there are Scottish powers, then those issues for which the NDA is responsible will need to take account of where the boundary is between its powers and those properly devolved to Scotland in the 1998 Act.

The purpose of these amendments was to give effect to what the whole House will recognise as detailed and complex discussions over a number of months, so that we could arrive at this position on Report which was not previously the case. I could not give these answers in Committee but am in a position to do so now. The interests of Scotland need to be properly taken into account so that it is satisfied, while at the same time we reassure the noble Lord, Lord Dixon-Smith, that the broad thrust of this policy—as he will recognise—is overwhelmingly a government policy which covers the whole of the United Kingdom.

5.45 p.m.

Lord Dixon-Smith

My Lords, it is not the direction of government policy that concerns me; it is the direction of the construction of Clause 9(4). With respect to the Minister, he has not really answered that point. He might prefer to leave that to Third Reading when he will see with even greater clarity—because, by then. his amendments will all be on the face of the Bill—that those particular words are unnecessary.

Clause 7 [Supplemental functions]:

Lord Whitty moved Amendment No. 11: Page 6, line 44, leave out "benefiting" and insert "that benefit

The noble Lord said: My Lords, in moving Amendment No. 11, I shall speak to the other amendments in this group.

These amendments are a direct response to requests from noble Lords opposite to raise the profile of the environment in the NDA's responsibilities, particularly in the localities. Specifically, they emphasise that its function in encouraging and supporting activities that would benefit the social and economic life of local communities could be extended and include activities that would bring environmental benefits.

The Government recognise the concerns expressed in Committee, particularly by the Liberal Democrat Benches, that this was not clear and that it was important that projects for environmental benefits were included. We understand those concerns and that, on reflection, it would be useful to add that to the Bill. Therefore, Amendment No. 11 addresses that issue in Clause 7. The subsequent amendments are drafting amendments to reflect that point in relation to the powers of the NDA in Clause 10 and the contents of the NDA strategy in Clause 12. I beg to move.

Baroness Miller of Chilthorne Domer

My Lords, I am very grateful to the Minister for bringing forward amendments which answer our question as to whether communities around stations to be decommissioned should be able to profit from environmental projects that are grant aided by the NDA, as well as social and economic ones. It is a particular pleasure to be able to agree with him today on something. I am very grateful.

Lord Whitty moved Amendment No. 11A: Page 6, line 46, at end insert "or that produce other environmental benefits for such communities.

Clause 9 [General duties when carrying out. functions]:

[Amendments Nos. 12 to 18 not moved.]

Lord Whitty moved Amendments Nos. 19 and 20: Page 9, line 7, leave out second "or Page 9, line 8, at end insert "or have been notified both to the NDA and to the Secretary of State by a devolved administration.

Clause 10 [Powers for carrying out functions]:

Lord Whitty moved Amendments Nos. 21 to 23: Page 9, line 37, leave out from "hold" to second "and" in line 38 and insert "nuclear site licences, registrations under section 7 of the 1993 Act Page 9, line 41, leave out "benefiting" and insert "that benefit Page 9, line 42, at end insert "or that produce other environmental benefits for such communities.

Schedule 2 [Procedural requirements applicable to NDA's Strategy]:

Lord Whitty moved Amendments Nos. 24 to 26: Page 141, line 34, at end insert— () The Secretary of State must also consult the Scottish Ministers before approving anything relating to proposals for the non-processing treatment, the storage or the disposal of hazardous materials if it appears to him that the proposals would have an effect (notwithstanding that they relate only to England and Wales)—

  1. (a) on the management of hazardous materials located in Scotland; or
  2. (b) on the use of a site in England and Wales for the non-processing treatment, the storage or the disposal of hazardous materials that could be brought to that site from Scotland."
Page 142, line 36, at end insert— () In this paragraph "non-processing treatment" has the same meaning as in section 6. Page 143, line 2, at end insert— (5) The NDA may also exclude from what it publishes under this paragraph—
  1. (a) anything relating to the private affairs of an individual the publication of which the NDA considers would seriously and prejudicially affect the interests of that individual; and
  2. 433
  3. (b) anything of a commercial nature relating specifically to the affairs of a particular body of persons the publication of which the NDA considers would seriously and prejudicially affect the interests of that body.
(6) In determining whether to exclude anything from publication under sub-paragraph (5) the NDA must have regard to whether the harm that would be caused by publication is likely to outweigh the benefits.".

Clause 12 [Contents of strategy]:

Lord Whitty moved Amendments Nos. 27 and 28: Page 11, line 16, leave out "benefiting" and insert "that benefit Page 11, line 17, after "facilities" insert "or that produce other environmental benefits for such communities.

Schedule 3 [Procedural requirements applicable to NDA's annual plans]:

Lord Whitty moved Amendments Nos. 29 to 31: Page 144, line 8, at end insert— () The Secretary of State must also consult the Scottish Ministers before approving anything relating to proposals for the non-processing treatment, the storage or the disposal of hazardous materials if it appears to him that the proposals would have an effect (notwithstanding that they relate only to England and Wales)—

  1. (a) on the management of hazardous materials located in Scotland; or
  2. (b) on the use of a site in England and Wales for the non-processing treatment, the storage or the disposal of hazardous materials that could be brought to that site from Scotland."
Page 144, line 34, at end insert— () In this paragraph "non-processing treatment"" has the same meaning as in section 6. Page 144, line 46, at end insert— (5) The NDA may also exclude from what it publishes under this paragraph—
  1. (a) anything relating to the private affairs of an individual the publication of which the NDA considers would seriously and prejudicially affect the interests of that individual; and
  2. (b) anything of a commercial nature relating specifically to the affairs of a particular body of persons the publication of which the NDA considers would seriously and prejudicially affect the interests of that body.
(6) In determining whether to exclude anything from publication under sub-paragraph (5) the NDA must have regard to whether the harm that would be caused by publication is likely to outweigh the benefits.".

Clause 14 [Annual reports]:

Lord Whitty moved Amendments Nos. 32 and 33: Page 14, line 35, at end insert— () Before giving a direction for the purposes of subsection (3)(j) the Secretary of State must consult the Scottish Ministers. Page 15, line 5, leave out from "anything" to end of line 6 and insert "falling within subsection (9). (9) The following falls within this subsection—

  1. (a) anything the publication of which the Secretary of State considers to be against the interests of national security;
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  3. (b) anything relating to the private affairs of an individual the publication of which the Secretary of State considers would seriously and prejudicially affect the interests of that individual; and
  4. (c) anything of a commercial nature relating specifically to the affairs of a particular body of persons the publication of which the Secretary of State considers would seriously and prejudicially affect the interests of that body."

Lord Jenkin of Roding moved Amendment No. 34: After Clause 14, insert the following new clause—

"SCHEMES FOR SOCIAL AND ECONOMIC ASSISTANCE WITH RESPECT TO DECOMMISSIONING (1) Where the Secretary of State makes a direction under section 3 which specifies paragraph (b) or (f) of section 3(1) as the purposes for which an installation is designated, unless he considers that the decommissioning of the installation will not cause adverse economic and social effects on communities living near it, he shall also make a direction to the NDA and any relevant development agency within whose area any communities so affected are situated, requiring the NDA and any such agency to prepare together a scheme for mitigating those effects. (2) A scheme prepared under subsection (1) shall include the following—

  1. (a) particulars of the way in which the powers conferred by section 10(2)(c) and (as the case may be) by—
    1. (i) Part 1 of the Regional Development Agencies Act 1998,
    2. (ii) the Welsh Development Agency Act 1975, or
    3. (iii) Part 1 of the Enterprise and the New Towns (Scotland) Act 1990, are proposed to be exercised, and
  2. (b) such other particulars and information as the Secretary of State may from time specify.
(3) Particulars and information may be specified by the Secretary of State under subsection (2)(b) either generally, or with respect to a particular scheme or description of scheme. (4) The NDA and a relevant development agency to which a direction for the preparation of a scheme under paragraph (1) is made shall as soon as reasonably practicable submit the scheme to the Secretary of State for his approval; and the Secretary of State shall either—
  1. (a) approve the scheme submitted to him with such modifications, if any, as appear to him to be appropriate; or
  2. (b) give notice to the NDA and the agency specifying the matters with which he is dissatisfied and requiring the NDA and the agency to revise and resubmit the scheme to him for his approval.
(5) The Secretary of State may from time to time require the NDA and a relevant development agency to review a scheme approved by him; and upon such a review the NDA and the agency shall consider whether to submit proposals to the Secretary of State for the modification of the scheme. (6) Subsection (4) shall apply to—
  1. (a) any scheme resubmitted in consequence of a notice given under paragraph (b) of that subsection, and
  2. (b) any proposals for modification submitted under subsection (5), as it applies to a scheme submitted pursuant to a direction under subsection (1).
(7) If the Secretary of State considers that the NDA or a relevant development agency has failed properly to implement a scheme or modifications of a scheme approved by him under this section, he may give the NDA or the agency directions about the steps that it is to take for the purposes of securing such implementation. (8) Each of the following is a relevant development agency for the purposes of this section—
  1. (a) a regional development agency within the meaning of the Regional Development Agencies Act 1998;
  2. (b) the Welsh Development Agency;
  3. (c) Scottish Enterprise; and
  4. (d) Highlands and Islands Enterprise.
(9) For the purposes of this section, the area of Scottish Enterprise shall not be treated as including the Highlands and Islands within the meaning of section 21(1) of the Enterprise and the New Towns (Scotland) Act 1990 unless the Secretary of State directs otherwise.

The noble Lord said: My Lords, the amendment stands in my name and in the names of noble Lords from various parts of the House. I recognise that the noble Lord, Lord Campbell-Savours, has sat patiently while we have dealt with earlier parts of the Bill. The amendment also stands in the name of the noble Lord, Lord Maclennan of Rogart, who has taken part in the debates.

The amendment has been promoted by some of the local authorities in the areas likely to be seriously affected by decommissioning and, therefore, by the activities of the Nuclear Decommissioning Authority. The closure of nuclear installations or the substantial reduction of activity at such installations arising from the NDA's activities could—and almost certainly will—have serious adverse consequences for some of the communities around them.

A good deal of anxiety is being expressed about future employment prospects in those areas. One thinks particularly, but not exclusively, of Sellafield. Sellafield will be affected, if there is a cessation of reprocessing activities, which could mean the loss of thousands of jobs in an area that is otherwise of high deprivation and where any restructuring of the economy will be particularly difficult. Those of us who have over the years, had the privilege of visiting the remarkable installations at Sellafield know that it is a considerable trek. The roads are not good, and road transport is slow. That is the kind of thing that will make it difficult to attract other industries quickly to the area.

With regard to the economic impact of the NDA's decommissioning activities, the Bill includes several supplemental functions to the principal task of the NDA, which is to decommission and clean up the designated installations. I do not quarrel with that for a moment; that is its principal task. However, Clause 7(1) states that, the NDA shall have the function, to the extent that it considers it appropriate to do so, of … giving encouragement and other support to activities benefiting the social or economic life of communities living near designated installations, designated sites or designated facilities". It is clear that that function or power gives the NDA the capability to work with other government agencies and local authorities to provide economic support to affected communities. However, the communities and their representatives, who live in those areas, are concerned that the function, as set out in the Bill, is discretionary. The NDA may or may not do it. There is nothing contained in the Bill as it stands to give a clear assurance that affected communities, which may suffer severely the impact of decommissioning activities, will receive the necessary support to restructure their economies because of decommissioning and reductions in employment. One might well ask the question, what provision is being made for social and economic support in the anticipated expenditure of the NDA'? It may be too early to answer it, but are there going to be budget heads which will deal with this for the NDA's activities?

Given the overwhelming importance of the activities of the NDA in these areas as it works on its decommissioning duties, it should not be left to others to deal with economic consequences. I believe that it should be an integrated and required part of the NDA's duties. What we are seeking in these amendments is that instead of it simply being a power for the NDA to give economic support, there should be a clear duty laid on it. The amendment would give the assurance to the affected communities that support to mitigate the economic and social effects would be forthcoming by requiring that support be set out in a scheme and then approved by the Secretary of State. Without a statutory requirement for a scheme that commits to mitigate the economic and social effects, how can local communities be assured that the help they will certainly need will be forthcoming?

The burden of this amendment is that it should be a requirement, a duty, and not merely a power. I shall be interested to hear the Minister's answers on this. There are many worried people around the country, not only in Sellafield and Dounreay, but in a number of other areas where the NDA will have its activities. I hope that the Government will be able to give them the assurances that we seek with this amendment. I beg to move.

6.00 p.m.

Lord Campbell-Savours

My Lords, I shall try to truncate what I was going to say because I do not want to repeat what the noble Lord, Lord Jenkin of Roding, has said. I am grateful to him for moving this amendment. It provides us with a peg on which to promote the discussion on decommissioning and regeneration currently under way in Cumbria where I live and where I have spent most of my life.

My noble friend will know that the decommissioning of nuclear plants will have a significant effect on local economies. The noble Lord, Lord Jenkin, set out the legislation which deals with this particular issue and draws specific attention to the words, to the extent that the NDA considers it appropriate to do so". Those words worry us.

This capability outlined in Clause 7 coupled with Clauses 10(2)(c) and 12(2)(e) clearly gives the N DA the power to work with other Government agencies and local authorities in providing economic support to communities likely to suffer adverse consequences from reduced activity at nuclear installations.

At first glimpse it is very helpful. But there are profound concerns in West Cumbria as to whether the capability will actually deliver the benefits required if decommissioning of aspects of the work at Sellafield is to proceed. The Bill does not specify the support that we believe is required. For example, in West Cumbria the impact of a reduction in reprocessing activities at Sellafield may mean a significant reduction in employment in areas of high deprivation and all exacerbated by the relative remoteness of the communities involved.

Given that efforts to ensure balanced economic regeneration in that area over the past 20 years have failed to reduce West Cumbria's dependency on the nuclear industry, it is clear that a far more coordinated approach will be necessary now that the Sellafield site is moving into a period of uncertainty. When I was one of the local MPs, I always believed that the dependency on nuclear employment, which had increased in recent years following a reduction in other manufacturing activity in West Cumbria, was not conducive to the development of a balanced economy, despite my very strong support for nuclear power. That was also the expressed view of many in the nuclear industry itself. All that gives a greater importance to the need for co-ordinated, socioeconomic regeneration programmes, not only in West Cumbria but in other parts of the country affected by the NDA. It is therefore vital that the NDA is required to ensure that the impact of its decisions and actions as they affect communities living near the, designated installations, designated sites and designated facilities", is not left to others to deal with, but is an integrated and required part of its duties.

Regeneration on the scale required will require substantial investment of funding and support from relevant bodies. To encourage innovation, enterprise and commitment, a community needs to have confidence in its future. In the absence of a clear assurance in the Bill as it stands, will that support be provided?

How will the affected communities be assured that their future in terms of economic stability will be properly addressed? Through its organising of contractual arrangements for cleaning up sites and other responsibilities, the NDA has a vital role to play in facilitating regeneration. Economic benefits to be realised from the contractual arrangements should be optimised by the NDA as should those from the re-use of the same cleaned-up sites. Additional to these are its capabilities through the Bill to provide assured funding in the form of grants and loans. Accountability to maximise these opportunities and clarity as to what is to be provided is vital to help to reassure local communities. My noble friend gave the noble Baroness a very positive answer on the question of support for environmental projects. I hope that he can reassure me in the same way on this matter.

Clause 11 of the Bill requires the NDA to prepare a, strategy for carrying out its functions; and … from time to time to revise that strategy". The strategy would be required to set out how the NDA proposes to exercise its functions under Clause 7 (1)(e). Given that this is a supplemental function, will affected communities be sure that economic support is prioritised by the NDA and adequately resourced'? If not, will the Government require that it is?

On behalf of people in West Cumberland, in the absence of this amendment, how would the NDA be made accountable for ensuring that the socioeconomic impact of its activities is dealt with in a manner acceptable to the communities affected? For the purposes of enabling the NDA to carry out its functions, the Secretary of State may make grants to the NDA. I understand that it will be the duty of the Secretary of State to establish and maintain an account to be known as the nuclear decommissioning funding account, which would be the source of funding for the NDA to exercise its functions under Clause 7(1)(e) of, giving encouragement and other support to activities benefiting the social or economic life of communities living near designated installations". What allowance has been made in the estimates produced for the anticipated expenditure of the NDA for the funding of measures to offset the socioeconomic impact of its activities? As the Bill is drafted, there is considerable uncertainty about what socioeconomic support affected communities can expect. People want to know whether it would be additional to existing funding sources. Who will provide such support and how will it be guaranteed in the long term? This lack of clarity is a matter of some concern for those communities.

That is the case from Cumbria for the proposed amendment. It would require the NDA and the relevant regional development agency—as the Government's agent for delivering economic assistance—to prepare schemes for mitigating socio-economic effects on local communities. Setting these out in detail, underpinned by legislation, will go a considerable way to giving the clarity and guarantees that would be needed.

I welcome the Secretary of State's plans, announced in December 2003, to establish a strategic task force for West Cumbria. This is an important statement that the Government will work with representatives of the community and other relevant bodies, to draw up and implement a vision for the future. While supporting this important initiative, I believe it complements—and does not remove the need for—the proposed amendment. Clearly, it is primarily relevant to West Cumbria as far as we are concerned. As the Bill stands, there is no commitment to provide additional, long-term economic support. Obviously, there cannot be a guarantee that the task force would be operational in the long term. As we are all aware, priorities—and, indeed, administrations—change. Nevertheless, a commitment bound into the legislation would give the necessary reassurances, and be very helpful to all those involved in regeneration.

Without a commitment to a scheme of support as set out in the amendment, or a very clear statement by the department guaranteeing a commitment outside the legislation, how can local communities be assured that the required level of economic support will be provided? This brings me to my final question. In the absence of this proposed amendment, could the Minister advise how the financing of necessary socioeconomic measures will be guaranteed in future years?

I hope to get a very positive response from Ministers to each of my questions today, as they will be pored over by lots of people in the county of Cumbria.

Lord Maclennan of Rogart

My Lords, the noble Lord, Lord Davies of Oldham, in an answer in an earlier debate, drew attention to my long-term concerns about the community in which Dounreay is situated. The arguments which have been eloquently deployed by the noble Lord, Lord Campbell-Savours, for Cumbria, may be thought to apply a fortiori to Caithness in the north of Scotland.

The concerns which he has described as being considerable in West Cumbria have, to some extent, been answered in principle by gestures, and even by important decisions, of the Government. To locate the headquarters of the new agency there, for example, might well be thought to have been against the sense of those who were simply concerned about economics. But it was no doubt a welcome decision. So far as Caithness and the Dounreay community are concerned, I think it is important, although the issue is not pressing in the sense that a downturn in employment is not anticipated in the short term. To address these issues now is important, because we are setting up a statutory framework within which these issues will have to be addressed at some point. It is almost impossible to exaggerate the significance of the employment offered, directly and indirectly, in the far north of mainland Britain because of the experimental reactor and establishment at Dounreay. More than 3,000 people are directly employed on the site at present, but the ripple effect is enormous; it involves the service industries, in other related manufacturing and supply industries.

It is also very important to recognise that the infrastructure needs of a community of that kind have to be sustained and will require continuing expenditure by local government and other public agencies. If there is nothing but a prospect of decline, it becomes much more difficult for those bodies to justify expenditure. Therefore, it is necessary to recognise that there is no natural alternative employment in such areas, notwithstanding all the considerable efforts made to diversify the local economy, which have been to some extent remarkably successful, against a background of pressure on the fishing and agricultural industry flowing from structural support and a greater extensification of agricultural enterprises. Employment needs to be encouraged through the recognition of what can be done in conjunction with the developments for which the Nuclear Decommissioning Authority will have responsibility.

The Government will no doubt point again, as they already have, to the empowering clause of the Bill, which the noble Lord, Lord Jenkin of Roding, quoted in lull. I refer simply to Clause 7(1)(e). Empowerment is not enough, because it is quite clear that the reason for the establishment of this authority is to accelerate and make more effective the decommissioning process as part of the environment and energy requirements of this country, and also for reasons of economy. It is being set up not as a development agency but for the specific tasks to which I referred. None the less, it will deploy resources which, if used with the additional purpose of extending the skills in the community, could allow it to do much more than any other existing agency.

The body will have a far larger budget than the regional development agency in the area and than the total budget of the Highlands and Islands Enterprise, which must be deployed throughout the whole half of Scotland in which it is operative. While it is clear that the budget of the NDA will not be directed principally to the schemes of social and economic development, if the budget is spent in a manner consistent with agreed schemes to develop local skills, for example, and to assist in the development of spin-off technology from research work being done on the site, that could be highly beneficial.

There is a particular problem about the position of the Scottish sites in the compass of the Bill. Much of the responsibility for economic regeneration is devolved, and I am not entirely certain that the drafting of the proposed new clause to which I have put my name adequately addresses those points. However, I have little doubt that it would be the wish of the Scottish executive to ensure that the Scottish sites under the NDA's authority will be no less advantageously treated than those south of the Border. Will the Minister who replies to the debate engage in discussion with the Scottish Executive between now and Third Reading to ensure that the wishes and support of the Scottish Executive for what is being done in the Bill is made explicit? I do not think that it would appropriate to second-guess the approach that they might wish to take but I believe that the primary duty will remain with the Secretary of State. The NDA will be accountable to him for schemes that will have to be worked in conjunction with bodies that are otherwise accountable to the Scottish Executive. That does not seem to me to be an insuperable problem to manage. I hope that in their answer to this debate the Government will show their readiness to engage in that dialogue. I have no doubt that they are as aware as anyone of the seriousness of the problems that will be faced in the future by these communities.

Lord Woolmer of Leeds

My Lords, I should briefly explain why I have an interest in this matter. Many years ago I worked for a number of years as a consultant with BNFL and got to know West Cumbria very well as a result. With another hat on, many years of my political life have been spent in Yorkshire where we saw the run-down of the mining industry and the problems that had to be tackled there.

When I look ahead to the next few years and the possible major changes in West Cumbria, in which I have a long-standing interest, it causes me concern. For people from outside West Cumbria or Dounreay, it is often impossible to understand how far away people can feel. Remote is probably the wrong word nowadays, but noble Lords will know what I mean. They are intensely, remarkably, dependent, directly and indirectly, on one industry. This is not just special pleading for an industry or for people in an industry, these are very special circumstances.

The local authority in the area has had to cope with one of the largest and most complex nuclear installations in the United Kingdom, if not in the world. It has coped with that on its own. It is a tiny local authority. It has put not only local interests at the forefront, but national interests too. The nuclear industry has not always been popular but the local authority has stood by it. It has stood by the industry and I hope that now that the Government will look after the area and help with the consequences of a rundown in part of that industry.

As my noble friend Lord Campbell-Savours said, last December, following representations by Dr Cunningham, Member of Parliament for Copeland, and the trade unions, the Government announced a cross-cutting departmental taskforce to look at future prospects for industry and employment in West Cumbria. It would be helpful to the House and to people in West Cumbria to know what is happening with that task force. Is any progress being made? What progress can we look forward to?

In my experience, BNFL has taken its wider responsibilities in West Cumbria very seriously for many years. We are asking that the new decommissioning agency follows in that tradition. BNFL provided the original funding for the West Lakes Science and Technology Park and funding for the West Cumbria Development Agency. So this is not a new matter and I hope that that example can be followed by the new agency. With the taskforce, the Government appear to recognise that West Cumbria is a very special case. BNFL has shown that one can invest in the wider community and the Bill gives the NDA power to provide economic support.

People in West Cumbria feel very exposed to the changes that face them. Naturally, as changes hit them, they seek maximum reassurance that actions will be taken to secure economic stability in their area. I understand that the Government may have an alternative approach in mind—a memorandum of agreement or similar arrangement. I should be extremely interested if my noble friend could tell us more about what the Government have in mind. I should also be interested to hear more about the terms of reference and the action time scales of the cross-departmental review.

Above all, I believe that communities like West Cumbria and Dounreay will seek a clear statement today that the Government recognise the size of the possible problems ahead and the very special circumstances of the communities involved. They seek reassurance that a memorandum of agreement and task forces really will produce firm, committed and timely action to meet the employment needs of communities that have been critical to the energy needs of this country. Speaking as a nuclear industry supporter, I hope that it will still have a substantial life but there will be changes. I hope that the Government will stand by those communities as they have stood by this country at a time of need.

Baroness Byford

My Lords, as an outsider coming from the Midlands and not being directly connected with any nuclear plant, I should like to add a few words. Two years ago the foot-and-mouth outbreak had dire consequences for many communities of which Cumbria was one. Following the outbreak I went up to Cumbria and stayed in West Cumbria, although I did not have a chance to make a site visit to Sellafield.

However, one of the points that was made very clear to me then was the dependence of that community on Sellafield for employment, not only directly at the site, but also in other industries and businesses which support it directly and indirectly. On my tour around the area staying at bed-and-breakfasts and places that put people up who came to the site, I found that they were very dependent on that industry. There is not a tremendous amount of alternative work up there.

The noble Lord, Lord Woolmer of Leeds, is quite right to say that there is a feeling that "Nobody cares for us. We're a long way away". I got the feeling from the communities themselves that they try to support and encourage each other. While the industry is thriving, that is all right. But my noble friend was quite right in his opening remarks to refer to the degree of uncertainty existing within the industry.

Therefore, although I have no direct interest or expertise in this field, I can only reflect that my three days up there underline the expressions of concern that have been expressed by noble friends from every side of the House. Accommodation, small shops, and other businesses will suffer. Many people who are skilled in various fields will suffer. I suspect there are not many other fields that they can diversify into. It is a huge problem that needs to be addressed.

I will not go through the individual questions that the noble Lord, Lord Campbell-Savours, raised as the Minister will respond to them. However, as a Midlander, I was quite struck by the degree of reliance of the area. I am sure that the same is true of other areas. The only other experience I have is of Sizewell B. At the moment, that is very much ongoing and, one hopes, will be so for some time. But for those areas that are very remote, I just wanted to add an outsider's point of view in support of the communities affected. I know how concerned they were even when I was in West Cumbria two years ago.

As the noble Lord, Lord Maclennan of Rogart, mentioned, the farming community at that time was experiencing difficulties in trying to get re-established. My point is that if the farming side is experiencing problems and there is uncertainty about Sellafield, what else is left?

It was drawn to my attention that it is all very well to talk about tourism—the centre of Cumbria tends to be a honey-pot area—but not many people venture up the west side of Cumbria. That area is more remote than central Cumbria. I hope that the Government will answer the questions that have been asked. The amendment is hugely important. I hope that the Government will accept it. If they do not like parts of it, I hope that they will say so and enable us to propose a measure at Third Reading that is worth while and will help people in the vulnerable communities that we are discussing.

Lord Davies of Oldham

My Lords, it is a pleasant task to reply to such an impressive debate. I am very glad that the noble Baroness, Lady Byford, joined in and spoke of the trials and tribulations that Cumbria has suffered in recent years. Cumbria has, indeed, experienced very real difficulties. Before the noble Baroness entered the debate I felt that it was just like old times with the noble Lord, Lord Jenkin, making representations of a more general nature based on his expertise. In the speech of my noble friend Lord Woolmer I thought that I heard echoes of constituency representations and economic representations from the past. I appreciate very much that this debate is of great importance to a number of communities of which clearly Cumbria is one. However, I shall refer also to Caithness and Dounreay.

I hope that we can reach agreement on this matter. I believe we all recognise that the crucial responsibility of the N DA is to secure nuclear decommissioning and clean-up for the benefit of the nation. It is important that that task is carried out safely, securely and in ways which protect the environment. It is a programme that we all recognise will span many decades and will cost many billions of pounds. It is a huge commitment for the nation. The NDA is the organisation charged with this most significant task.

The NDA will certainly need to focus all its attention on the task to ensure that it is carried out effectively and as swiftly as possible, and to ensure best value for the taxpayer in what we recognise is a very substantial commitment of the nation's resources. The Bill clearly identifies the NDA's principal functions in Clause 3 quite separately from the other supporting and supplementary functions. The Bill is drafted in that way because those prime obligations of the NDA are of such importance to the nation.

Although I understand the motivation behind the amendment of the noble Lord, Lord Jenkin—that was reinforced by the contributions of other noble Lords—I do not think that we can accept it. This is a very important subject and I shall return to it in a moment. I want to reassure noble Lords that the issues which have been raised today will be tackled constructively. However, it would not be appropriate to deflect the NDA from its main task. The measure would turn the NDA into a vehicle for social and economic regeneration. It would make the NDA equivalent to a regional development agency when dealing with the economic consequences of nuclear decommissioning, and it would place on the NDA a very considerable burden in terms of resources and expertise in ensuring that it could carry out such responsibilities.

I venture to suggest that, as the amendment implicitly recognises, the duty of promoting regional development properly belongs to other bodies—to the regional development agencies and the equivalent bodies in Scotland. It is a well established framework for addressing the social and economic needs of the individual regions. It will be recognised that this Government have sought to strengthen the role of the RDAs. There is no reason why the relevant agency could not address the impact of nuclear decommissioning in the same way that it may have to address the closure of any other significant employer in a region. I recognise that there are particular issues that are associated with the location of nuclear plants, and why it is of such significance for the local communities when they go.

It is difficult to measure the economic consequences for a region in such cases. When one or two of our other great industries have gone sharply into decline—shipbuilding, steel making and particularly coal mining—the devastating effects on local communities have required governments to respond. They have done this with different levels of commitment, but I do not wish to make political points on that score at this time. When governments have responded to such situations, they have recognised that resources need to go into proper and appropriate channels, and that the responsibility for those needs to reside with local or regional bodies. The NDA does not have, and will not have, such responsibility.

The amendment would give the Secretary of State for Trade and Industry sweeping powers to direct detailed action by the NDA, as well as by the relevant regional development authority—for which other Ministers, including Scottish and Welsh Ministers, have responsibility. That is unlike any of the powers provided by the RDAs, who clearly have prime responsibility for this kind of operation and for meeting these issues.

As we considered other issues raised earlier in the Bill, I hope that I have convinced the House that the NDA is not the right body to have this responsibility. That is not to say—and I hasten to make this point—that we do not recognise the particular problems that will be faced by regions that are heavily dependent on the nuclear industry. The examples of West Cumbria and the north of Scotland have been graphically expressed this evening.

Nor does it mean that the NDA will have no role to play in this regard. It clearly has a contribution to make. Like any significant employer—such as BNFL before it—the NDA will play an active role in encouraging and supporting activities and initiatives that bring social and economic benefit to local communities. We have provided for that in the Bill. We are not prepared to see the NDA transformed into a super regional development agency, when it has a very important and significant national role that is related to its prime purpose.

I listened to the detailed representations that have been made this evening. As I have already acknowledged, in a number of cases they have been infused by both the expertise and experience that comes from elected members for such areas, and their insight into the impact on these communities. The Government are seized of these problems, in particular those of West Cumbria, where the nuclear industry has played a large role in the region's economic life.

My noble friend Lord Campbell-Savours referred positively to the strategic task force for West Cumbria that was announced by the Secretary of State last December. It is our intention for this to play a substantial role in the long-term regeneration of the region.

The success of the Dounreay decommissioning strategic response task force established in 2001 and the co-operation between the UKAEA and Highlands and Islands Enterprise and its network of local enterprise companies shows what can be achieved and what needs to be done. I have not the slightest doubt that a great deal more needs to be done, as was eloquently expressed today by the noble Lord, Lord Maclennan. But there we have an indication of work in progress with encouraging results. We will want to build on that experience as regards West Cumbria.

The Government have agreed to conclude a memorandum of agreement with the West Cumbria local authorities which will establish a framework for the roles and responsibilities of various stakeholders and a mechanism for the needs of the region to be given consideration by the Government. This is in the early stages of preparation, but it will be in place before the NDA takes up its responsibilities for sites in April 2005.

My noble friend Lord Campbell-Savours said that he is more than well aware that Furness in West Cumbria is one of the three priority areas in the north-west regional strategy. The North West Development Agency is working with local partners to co-ordinate funding schemes, including regional selective assistance, the European structural fund, the single regeneration budget and neighbourhood renewal funding. Under this Government, those programmes have contributed many millions of pounds and created or safeguarded thousands of jobs.

As I indicated earlier, it is not right to dilute the focus of the NDA by giving it direct responsibilities for regional development. It must make decisions on decommissioning and clean-up on their own merits. No other industry has obligations placed upon it such as the amendment would place on the NDA. There is no reason why the NDA should be required to take on responsibilities that others have not. This role belongs to the RDAs and to the local authorities.

6.30 p.m.

Lord Maclennan of Rogart

My Lords, I understand what the Minister says and I do not want to delay him because he is trying to be as positive as he can. However, there are things that can be done by bodies such as the NDA which cannot be done by development agencies. For example, they could allow a higher proportion of apprenticeships to be established at their sites. They might be strictly justified by a purely commercial lean organisation, but that could have the kind of benefits that would enable roots to be put down in the community. Those are the sort of initiatives one wants to see.

Lord Davies of Oldham

My Lords, I am grateful for that positive suggestion. The noble Lord, Lord Maclennan, is ploughing fertile ground. Where the NDA is the employer and where it is involved in taking responsibility for action, of course we must look at the way in which we can use its resources to support and buttress the local economies as best we can. That is why, as my noble friend will readily acknowledge, there has been an indication that West Cumbria is the preferred location for NDA headquarters.

That clearly demonstrates the Government's confidence in West Cumbria and our commitment to generating new growth and opportunities for the region. I realise that that example is no immediate solace to the noble Lord, but I hope that it meets some of his anxieties.

Lord Maclennan of Rogart

My Lords, the Minister could easily give me comparable solace by indicating that he would welcome the extension of the role of the pensions office in Thruso, currently run by the AEA, and allow it to take on other public pensions. We may want to return to that matter later.

Lord Davies of Oldham

My Lords, I have recognised that there is an opportunity later in the Bill for us to engage in that debate and I now see the one dimension that the noble Lord will introduce. Of course we must look at all constructive ways in which we can see such an important body contribute its significant resources. The Government's indication of where they prefer the headquarters to be shows our earnest intent to follow exactly the thinking of noble Lords who have contributed to our debate.

I was asked about the level of funding that the NDA will feel appropriate to commit to supporting local communities. That will be a matter for the NDA, subject to ministerial approval. We must allow the NDA to be established before expecting us to reach a view—it is early days. The estimates for the whole of the NDA's activity, a total budget in the order of £2 billion a year initially, are under consideration in the current public spending review process for the three-year period from 2005–06. That £2 billion is substantial and, as the noble Lord, Lord Maclennan, has spotted, indicates that there may be margins for discretion and judgment which may help the issues that he has identified.

My noble friend Lord Campbell-Savours will not be surprised that I cannot give him much solace regarding guarantees on longer-term spending levels. Decisions on public spending are taken at the appropriate time through the appropriate process and noble Lords will recognise that this is not quite that time and I am not quite the government representative to make commitments along those lines.

Baroness Byford

My Lords, I seek some clarification. The Minister kindly mentioned that he sees the role of the RDAs helping in this area. But the RDAs will have many other demands on their money. So, I am still concerned that the Minister is trying to pass responsibility to the RDAs to do what most of us consider to be the responsibility of the authority that is being established.

Lord Davies of Oldham

My Lords, the RDAs are equipped to deal with the significant social and economic issues that emerge in their areas. I already have evidence of the way in which the north-west RDA is addressing a clearly identified and significant problem in its area. It will be making both constructive suggestions and the strongest representations about the budgetary implications for tackling a problem—mentioned by the noble Baroness regarding her Midlands interests—which might not show itself with quite the same degree of force in any particular industry in the Midlands. I believe that she will recognise the salience of the issue. I am merely saying that, within the current framework, that is the role of the RDAs. The role of the organisation that we are considering in the Bill is of such importance that it would not be right for us to seek to translate it into the same vehicle for social and economic regeneration that is indicated in the amendment. I am not saying that the NDA has no role to play or that there are not substantial resources at stake. There are many opportunities that can be exploited as regards the work of the NDA and the RDAs, local employers and local authorities in addressing the situation.

However, the prime task of the NDA, with such substantial resources, is to tackle a national task on behalf of the whole of our community. Although I recognise that significant issues have been raised and noble Lords have identified what needs to be tackled in the areas mentioned, that is why I hope that the noble Lord, Lord Jenkin, will recognise that we cannot accept his amendment and I trust that he will withdraw it.

6.45 p.m.

Lord Jenkin of Roding

My Lords, I am immensely grateful to all those who took part in this debate. It has been a valuable occasion. Not only have we been able to explore the Minister's mind on how these problems should be dealt with but I believe that it will also be of some comfort to those who are following these events outside and who feel the threat as acutely as has been stated by noble Lords who have strong knowledge of particular areas.

For me, rather interestingly, this has been a trip down memory lane. It is 20 years since I was Secretary of State for the Environment in the mid-1980s, when I found myself intimately concerned with the problems about which a number of noble Lords have spoken—that is, the decline of heavy industries, sometimes concentrated very much in particular areas. I shall never forget my regular fortnightly visits to Liverpool and Merseyside, which was perhaps one area most hard-hit by the decline of what was then the shipping industry.

We had a number of instruments at our disposal then. Local development agencies could be a channel for central government money and a focus for activity. However, I entirely recognise that all that has now moved on. The Minister made frequent reference to regional development agencies and, in particular, to the activities that they are now conducting in the areas for which they are responsible. I took some comfort from what he said because I was unaware of how focused the RDA in the north-west of the country is. It recognises the need for activity.

As the noble Lord spoke, it seemed that one feature of this situation was, in a sense, the reverse of what one saw in other parts of the country in relation to other industries. The activity of the NDA in undertaking decommissioning means that it is itself a substantial employment user. There will be no sudden cut-off from that point of view. I would probably exempt from that the problems of reprocessing at Sellafield, but I do not believe that a final decision has yet been taken on that.

Normally, decommissioning plant—my noble friend Lady Miller and I had described to us by UKAEA and others what has been going on in various parts of the country in that respect—involves a fairly gradual rundown, whereas in respect of the earlier industries the problem was the catastrophic closure of a steel works, a shipbuilder or mines in a mining village in Yorkshire. I listened with interest to what the noble Lord, Lord Woolmer of Leeds, said about that. Then, one was dealing with a crisis situation, whereas, here, it will be somewhat different. Those who will have to deal with such problems in the area of nuclear decommissioning will have to recognise that they will probably require somewhat different solutions.

When we visited Harwell, we heard what UKAEA has been doing in the areas where it has been decommissioning. Winfrith in Dorset may be a very different kettle of fish from Dounreay or Sellalield; nevertheless, it is a fairly substantial nuclear facility and it has been wound down. With the creation of an industrial estate to bring in new works, those involved were quite proud of what they had been able to achieve. However, the situation is different from what one has been used to in the past, and I believe that that is something of which we shall have to take account.

The noble Lord, Lord Davies of Oldham, made frequent references to the fact that he did not want to see the NDA, the Nuclear Decommissioning Authority, turned into an NDA—that is, a national development agency. I can understand that. It has its primary task and I acknowledged that at the beginning when I moved the amendment. Of course, that is its primary role. It has to go ahead with decommissioning and clean up. But is it sufficient that they shall merely have the power to collaborate with other agencies, the local authorities, the regional development agencies, the task forces and so on that have been set up? I am not sure that it is.

We shall need to look carefully at what the Minister has said. We shall have to consult those who have supported the amendment. It may be possible to come back at Third Reading with a somewhat different amendment which may take account of the anxieties that the Minister has expressed in his reply. I hope that those who have spoken to the amendment will feel that that is a reasonable response. It would be difficult to go charging through the Lobbies at nearly seven o'clock on a Thursday evening—I am not sure how many noble Lords are here.

We have to take account of what has been said. We shall consider returning with something more than just the power provided for in the Bill, something which recognises, quite clearly, the arguments that the Minister has made, while at the same time giving more reassurance to the communities who feel themselves so threatened at present. I am also sure that this issue will be dealt with at some length in another place. Ours will not be the last words spoken on the matter. Having said that, I hope that those who have supported the amendment feel that a reasonable response is to say that I shall withdraw it, with a clear undertaking that we shall try to return with an amendment at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 [Duties to operate installations and to provide treatment etc.]:

Baroness Miller of Hendon moved Amendment No. 35: Page 16, line 9, at end insert— (5) In discharging that responsibility and in performing its designated responsibilities under section 3, the NDA shall place no restriction on the UKAEA or BNFL or any other suitably qualified and experienced British or other European Union company from tendering for and (if appropriate) being awarded contracts for the decommissioning of installations or the cleaning up of sites.

The noble Baroness said: My Lords, I introduced an identical amendment in Grand Committee. I have no hesitation in bringing it back for consideration by the whole of your Lordships' House because of the unsatisfactory and partly contradictory reply that I received; because it is a very important issue; and because of the well intentioned, but equally unsatisfactory explanatory letter that I received from the Minister about two weeks later.

Contradiction appears to be a feature of the Government's approach to our two major and world leading companies which compete for decommissioning and clean-up work, even on the sites that they occupy or have been operating. I would have thought that this topic was one that was not even open to question. I would have thought that the Government would have accepted it at the beginning. Initially, the view of the Government seems to have been that it was not open to question. On page 13, paragraph 1.23 of the White Paper, Managing the Nuclear Legacy, the Government said: Whilst UKAEA and BNFL will have the opportunity to demonstrate that they should be suppliers of choice to the LMA"— that is now the NDA— the management of clean up will be opened up to competition". Thirty-seven pages later at paragraph 5.39 the Government contradicted themselves in a massive U-turn when they said: The Government does not consider that it would be appropriate for UKAEA as a public sector body to compete for additional site management contracts against firms from the private sector".

That contradiction and the arbitrary, capricious and inexplicable decision of the Government, prompted the amendment in the first place. In the debate in Committee I asked for the origin of what I thought was a novel doctrine. I also asked why it was inappropriate for public sector companies to compete for publicly funded contracts. Indeed, the White Paper highlighted the guiding principles to be followed by the NDA in awarding contracts. Again, I quote the Government's words: getting the job done to high safety and security standards … best value for money consistent with safety, security and environmental performance … openness and transparency … competition—so as to make the best possible use of the best possible skills".

While I hesitate to quote myself, I cannot resist repeating what I told the Committee, namely, that that specification might have been written with UKAEA and BNFL in mind. Those two companies are world leaders in their fields. With the advantage of being established on the nuclear sites, it is likely that they will be able to offer the best value for money. By invoking this specious and hitherto unknown doctrine that it is inappropriate for public sector companies to tender for publicly funded contracts, the Government are simultaneously negating both openness and transparency, and depriving themselves of the services of two of the world's leading companies.

I also suggested that the policy would be in breach of the anti-competition provisions of Article 85 of the Treaty of Rome. The Minister gave a wholly unsatisfactory explanation for rejecting that amendment. First, he said that it would threaten the ability to exclude people from the pre-selection process. We are not talking about regiments of people—we are only seeking to ensure that UKAEA and BNFL are not arbitrarily excluded. Secondly, he suggested that while the two companies would remain in place as site licensees, it is only the strategic and senior management function that would be open to competition. Even assuming that these two leaders in their field need senior and strategic management, this is a sure way of paying for the same job twice.

The Minister suggested that contrary to my view about Article 85, there was some restriction in European law that prevented them from being allowed to compete. From a sedentary position, I must have facially expressed some surprise at this extraordinary suggestion, because the Minister was good enough to write to me subsequently to say that he, realised that his remarks were too sweeping in nature and could be confusing".

Well, he certainly got that right.

This amendment does not in any way inhibit the right of competitors to bid for contracts, in conformity with EU law. Indeed, the two companies say that they welcome competition, but I suppose they would say that. That the two companies have an inherent advantage of being on site is not a valid objection. Any successful bidder in any contract competition has some sort of advantage. In a convoluted argument in the same letter, the Minister suggested that having lost the clean-up contract, would somehow, hold the operational skills and expertise necessary to operate the sites".

As if the workers would just stand still and watch their jobs disappear from beneath their feet rather than take off elsewhere, perhaps abroad.

In his letter, the Minister denied that UKAEA and BNFL are uniquely placed as incumbents to provide a competitive clean-up service. Maybe not uniquely, but they must be at least as qualified as any other contractor to do this job. The Minister told me in his letter: There are a number of potential site management contractors who could manage nuclear sites safely and effectively.

That is good news. Let them come and try for the contracts, and hopefully the best company will win, and we shall benefit from the best expertise and the best value for money. In Grand Committee, I said that I did not know what hidden agenda the Government had in imposing this unnecessary, and as it happens illegal, restriction on these two companies. On reading the Minister's letter, which I have quoted only in part, I am far from reassured that there is not some ulterior motive in leaving the field open to foreign competition and depriving our national companies of valuable contracts and depriving our skilled work force of jobs. Goodness knows, listening to the previous amendment, how well it was moved and the concerns of people from across the country, it is inappropriate that they should not even be allowed to compete for work.

This amendment does not require the NDA to award the contracts to UKAEA or BNFL. What it does is to prohibit the NDA from deliberately not even allowing them to compete. That is the issue. I shall certainly want some much better explanation for the Government's obstinate stance of keeping them out of the market than the feeble non-arguments that the Minister has made so far. I sincerely hope that, given the time that the Minister has now had to think about it since we last debated the point, he will have reconsidered his position and will not simply continue to repeat the Whitehall doublespeak that he previously passed on to the Committee. It is late in the evening. It would be appropriate for the Minister to simply stand up and say that he agrees with and accepts my amendment. I beg to move.

Lord Jenkin of Roding

My Lords, the kindest thing that I can say about the long letter that the noble Lord, Lord Whitty, sent to my noble friend Lady Miller of Hendon, with copies to several of us, is that I found it very difficult to believe that he had read it before he signed it. I, too, look forward to hearing his response to my noble friend.

7 p.m.

Lord Whitty

My Lords, the letter attempted to find a way through what is a complex area. The central point is that Members of the Grand Committee felt that there was a hidden agenda to squeeze BNFL and UKAEA out of tendering for NDA sites, or even those sites that they currently occupy. I shall therefore try to set out the position on competition and site management in a slightly shorter style, so that noble Lords will understand it.

One misunderstanding arises from the fact that we must distinguish between the site licensee companies, BNFL and UKAEA, on the sites that they occupy, which will remain in place, and the contractors, the senior strategic management, which is what we are dealing with here with the competition that we are discussing. In other words, much of the anxiety about expertise and the skilled workforce employed in that area relates to site licensees, rather than the senior strategic management. The reference in the letter and in our previous debate to internationally competitive companies relates to the ability to deliver strategic management of such sites.

The amendment would require the NDA to refrain from restricting BNFL, UKAEA or other suitably qualified or experienced UK or EU companies from tendering for contracts to manage NDA sites.

Baroness Miller of Hendon

My Lords, the amendment would not restrict them; it would ensure that they had no restriction.

Lord Whitty

My Lords, I said, "refrain from restricting". Clearly, competition for strategic management will be subject to EU procurement rules, as the noble Baroness said—that was a slightly misleading part of my reply to the debate—and other international agreements on procurement, which is why restriction to UK or EU companies may not be appropriate here, which is a subsidiary point about the amendment. Fair and open competition is essential to ensure that the NDA gets the right skills mix in to double site management.

That is regardless of which company is involved or its nationality—although we must here bear in mind the national security situation. We want the company and the management personnel who can best deliver the NDA's objectives for a particular site. That is why we have chosen to test the market and why we are opening up the competition. Restricting people who a priori clearly already have that expertise and knowledge of the site would defeat the purpose of that competition.

We certainly do not intend, therefore, to restrict UKAEA or BNFL from competing for contracts to manage their own or other sites. Indeed, provided that they comply with the terms of EU procurement rules, we want them to continue to improve the efficiency of their own organisation and to benefit from the sharpening up that competition will bring. In order to assist that, we tabled our own amendment towards the end of Part 1 of the Bill—I think it is Amendment No. 171—which will clarify that the UKAEA can itself play a full role in the competitive process. Those amendments have been discussed with UKAEA and we are working very closely with both the UKAEA and BNFL to help their managements create a viable contractor capability so that they can compete in these contracts.

Lord Maclennan of Rogart

My Lords, will the Minister clarify that point? There seems to be a possibility that some of us are operating at cross-purposes simply through lack of understanding. Is the Minister saying that the Government are ready to entertain the possibility of the UKAEA being an operator of choice for the first period and having a single contract with sufficient duration to enable it to get on with the job—say, for five years? If that is what he is saying, then that is a matter of great reassurance.

Lord Whitty

My Lords, I am not sure that I am saying that. I am not specifying a time scale, but the part of the contract that could subsequently be subject to competition would be the strategic management of the site. Therefore we are not talking about the role of the vast majority of current employees of BNFL and UKAEA on those sites. There is then a separate question of whether sites which are not UKAEA or BNFL at the moment could come under the responsibility of the NDA, where the UKAEA and BNFL could compete for the strategic management of those sites as well, subject to certain constraints. It is not the Government's intention to exclude them from that site. That is the central point, which the amendment was intended to correct—in other words, to prevent the exclusion, from being able to compete for other sites as well as for their own sites. The intention is that competition will apply at the strategic management level on all such sites.

Lord Campbell-Savours

My Lords, if they are not to be excluded then we can presume that in terms of the discussion that has taken place they are going to be satisfied?

Lord Whitty

My Lords, the UKAEA and BNFL understand that position and are in support of what will, it is to be hoped, become an amendment adopted by this House at a later stage in relation to clarifying some slight complexities of the UKAEA position. It recognises that it will be able to compete. That does not necessarily mean that it is happy with the fact that it will have to compete for the strategic management. Clearly there are anxieties that there will be knock-on effects in relation to UKAEA and BNFL and its workforce by opening it up to competition on those sites that they currently control. It would be wrong to give the impression that BNFL and UKAEA are utterly happy with that position, but they are happy that they will not be excluded from competing, given that we recognise the need to ensure that such experienced companies do have the opportunity to compete.

Clearly it is important for those companies to have clarity where the noble Baroness accused us of having a hidden agenda. There is no hidden agenda to exclude BNFL and UKAEA from being able to show that they were best placed to provide the services on that site. If we were to adopt this amendment, so that there was a specific reference to incumbent site operators in that respect, then we would get into the area where it would appear that we were giving them a competitive advantage over other potential contractors for running the strategic management of that site. That is one of the reasons why, even though the amendment is in a sense reflecting what would be the position anyway, it could be interpreted as being protective of site managers—certainly on those sites they currently run themselves—when the whole point of the changed approach is to make the strategic management of those sites subject to open, fair competition and issues of security and technical competence, and to competition internationally in this field. I hope, of course, that the UKAEA, BNFL and other British contractors would be able to benefit from the sharpness of competition in this country by competing elsewhere.

The complexity of the position has, perhaps, led to the belief that we were doing down BNFL and the UKAEA in that respect and with regard to their perhaps understandable resistance to changing and opening up to competition the sites that they control. It is not our intention to exclude them from the process, but it is our intention to make the process open to competition, which should be free, open and, if necessary, international. For those reasons, I cannot accept the amendment.

Lord Jenkin of Roding

My Lords, I have one question. The Minister has talked repeatedly about the strategic management of sites. What has happened to the phrase "site licensee"? I thought that we had the NDA, the site licensee and the contractors. What is the new entity "strategic management of the site", if it is not the site licensee?

Lord Whitty

My Lords, the site licensee will be managed by the senior strategic management. The site licensee may continue to be BNFL or the UKAEA, even if the strategic management were to be allocated through competition elsewhere. It most circumstances, that probably would be the case, certainly for the immediate period. That distinction has been there since the Bill was produced and, in essence, it was in the original White Paper.

Baroness Miller of Hendon

My Lords, we have ended up exactly as we started. The first answer that the noble Lord gave me in Committee was totally unsatisfactory and misleading. The letter was so convoluted that there was no way that anyone could understand it. With the greatest respect to the Minister, I am by no means certain that I understand the position one bit more or consider it one bit fairer.

All that I knew at the beginning was that anyone could compete for the licences of BNFL and the UKAEA but they were not able to compete for somebody else's licence. I may have misunderstood, so I will test the opinion of the House. The Minister will not mind if we win, because we will have what he says he wants.

7.12 p.m.

On Question, Whether the said amendment (No. 35) shall be agreed to?

Their Lordships divided: Contents, 31; Not-Contents, 53.

Division No. 4
Anelay of St Johns, B. Mancroft, L.
Attlee, E.[Teller] Miller of Hendon, B.
Barker, B. Newby, L.
Beaumont of Whitley, L. Newton of Braintree, L.
Bridgeman, V. Noakes, B.
Byford, B. Northesk, E.
Cope of Berkeley. L. [Teller] Northover, B.
Courtown, E. Norton of Louth, L.
Dixon-Smith. L. Pilkington of Oxenford, L.
Roper, L.
Elton. L. Seccombe, B.
Falkland, V. Selsdon, L.
Jenkin of Roding, L. Skelmersdale, L.
Lucas, L. Tugendhat, L.
Maclennan of Rogart, L. Wilcox, B.
McNally, L. Windlesham, L.
Acton, L. Borrie, L.
Amos, B. (Lord President of the Council) Bragg, L.
Brooke of Alverthorpe, L.
Andrews, B. Brookman, L.
Bach, L. Campbell-Savours, L.
Blackstone, B. Carter, L.
Clarke of Hampstead, L. McIntosh of Haringey, L.
Clinton-Davis, L. MacKenzie of Culkein, L.
Corbett of Castle Vale, L. Mackenzie of Framwellgate, L.
Crawley. B. Massey of Darwen, B.
Davics of Oldham, L. [Teller] Pitkeathley. B.
Dean of Thornton-le-Fylde, B. Rendell of Babergh, B.
Dubs, L. Rogers of Riverside, L.
Evans of Temple Guiting, L. Rooker, L.
Farrington of Ribbleton, B. Sainsbury of Turville, L.
Faulkner of Worcester, L. Sewel, L.
Gale, B. Simon, V.
Gibson of Market Rasen, B. Temple-Morris, L.
Goldsmith, L. Triesman, L.
Grocott, L. [Teller] Turnberg, L.
Haskel, L.
Hayman, B. Warner, L.
Hilton of Eggardon, B. Warwick of Undercliffe, B.
Hollis of Heigham, B. Whitaker, B.
Howells of St. Davids, B. Whitty, L.
Hunt of Kings Heath, L. Wilkins, B.
Lea of Crondall, L. Woolmer of Leeds, L.
Macdonald of Tradeston. L.

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

Lord Triesman

My Lords, I beg to move that consideration on Report be now adjourned.

House adjourned at twenty-three minuted past seven o'clock.