BRITISH NATIONAL NUCLEAR CORPORATION

§ Sir Trevor Skeet (Bedfordshire, North)

I beg to move, That the clause be read a Second time.

§ Madam Deputy Speaker

With this, it will be convenient to consider the following: New clause 10—The British Nuclear Company— '(1) The Secretary of State shall direct the generating hoard to place all its property, rights and liabilities relating to nuclear power in a company designated as the British Nuclear Company. (2) The British Nuclear Company and all its property, rights and liabilities shall remain wholly owned by the Crown.'. New clause 16—Nuclear levy— `(1) It shall be the duty of the Director to publish annually and distribute to each of the Consumer Committees, a report showing the difference in that year between the price of electricity generated from fossil and non-fossil fuel. (2) The Consumer Committees shall have a duty to publish the findings of the Director's report in a manner and form that may be easily understood by electricity consumers.'. Amendment No. 148, in clause 30, page 24, line 13, leave out subsection (1) and insert— `(1) The public electricity suppliers shall take steps to ensure that the mix of fuel sources and generation technologies available to them is adequate to ensure the long term security of supply to their customers. (2) The Director and the Secretary of State shall have powers to require, from time to time, that the pubic electricity suppliers demonstrate to them that their policies in fulfilment of subsection (1) above are adequately contributing to the long term security of supply.'. Amendment No. 147, in clause 30, page 24, line 14. after 'suppliers', insert `and appropriate consumers' bodies including the consumer committees and independent consumer organisations.' Government amendments Nos. 31 to 34.

Amendment No. 160, in clause 61, page 45, line 8, at beginning insert `save for the nuclear power stations for which the Secretary of State shall make proper and reasonable provision for retention in public ownership.'.

§ Sir Trevor Skeet

I make it clear that all the power stations dealt with in the new clause are nuclear. Being well disposed to the nuclear industry, I am disturbed that steps 261 are now being taken to unsettle the industry. My experience has been that, for a good many years, particularly in respect of the nuclear waste repository which was scheduled for an area near my constituency, the public have not been ready for a transfer of nuclear assets to the private sector. The public have not had sufficient time or are reluctant to accept the risks inherent in nuclear power, particularly if it is outside the public sector. A Crown company could provide a high-quality assurance to a nervous public who still look to the state for the protection of the environment. I am certain that, in time, that attitude will change and that the nuclear sector will be fully privatised.

It is rather odd that the Opposition and myself will probably vote in the same Lobby tonight, but for entirely different reasons. I am pro-nuclear and Opposition Members are anti-nuclear and pro-coal. It is the irony of history that men of different persuasion must be honest and put forward the arguments. I propose to advance to the Secretary of State the arguments about why a serious mistake is being made in this Bill.

I pay tribute to the Secretary of State for being here tonight. After all, he has many obligations. Important personalities are in the United Kingdom at the moment, and he could be enjoying an important dinner elsewhere.

My first argument is that much of the industry will remain with the state following the passage of the Bill. The production of nuclear electricity and the fuel cycle that is dependent upon it, including the reprocessing and recycling of plutonium and uranium and the disposal of nuclear waste, should properly be retained in a single integrated company. I agree that that is not the CBI's view. At the moment, the whole industry is in the hands of the state and, subject to the passing of the Bill, the United Kingdom Atomic Energy Authority and British Nuclear Fuels plc will remain so. My simple argument is that we should keep all relevant parts of the industry together. It is logical and it makes commercial sense to do so.

Secondly, many of the obligations to the nuclear industry—for example, those in schedule 12 and civil third liability—remain with the state. The obligations arising under clause 90 and schedule 12, comprising subsidies from the revenue for nuclear storage, reprocessing, waste disposal and decommissioning, should be monitored and scrutinised within the state system until the regulatory authority establishes its competence. It is an entirely new body, and we have no idea of how it will behave or perform. Further, third party civil liability for serious accidents remains the responsibility of the Government. Due to its extent, that liability is virtually unassignable to the private sector. The extent of liability remains covered by the Paris and Brussels supplementary conventions, which are multinational agreements.

The House should recognise that the nuclear option is also expensive for a private company. For example, I refer to construction overruns. The 450 MW Dungeness B took about 18 years to complete and had a load factor of barely I per cent., compared with the average of Magnox stations of 79.7 per cent. Hartlepool took 19 years to complete, and Heysham I took 17 years to complete. It is possible that construction overruns for contemporary stations will be reduced if not eliminated. I am glad to say that the work of some of the more recent AGRs has been praiseworthy.

262 Planning inquiries are diabolically expensive—the Sizewell inquiry cost £20 million—but we can reduce it to £10 million apiece if the planning process can be simplified or rationalised. I stress that there is an increasing burden of BNFL reprocessing charges. They are escalating fast, well beyond the provisions made in schedule 12.

Another point which the House should bear in mind is that on-going research and development is an essential ingredient of modern technology, and limited expenditure or economising tend to be counter-productive.

Energy remains a long-term strategy. The risks of a change in technology are enormous. It is unlikely that the market will provide the necessary investment in the formative and unprofitable stages. That is at least the lesson to be derived from the development of nuclear power in France. With the eventual rundown of fossilised fuels, fission or fusion will probably become inevitable, and Her Majesty's Government should now be in a position to direct it, as a long-term strategy, undisturbed by short-term considerations.

Technology for the production of electricity may change dramatically in coming years, with extensive penalties for obsolescence, particularly in conventional thermal nuclear power. The fusion route, via the Torus model at Culham in Oxfordshire, could be abandoned in favour of the simpler Fleischmann-Pons process, using palladium electrodes at normal temperatures. It is certainly premature to make any judgment of that.

I emphasise to the Secretary of State that a more sympathetic approach towards the potential of the fast reactor for recycling reprocessed products and depleted uranium could substantially advance the energy yield of a given quantity of uranium. The THORP plant of BNFL makes sense only if it produces uranium and plutonium for recycling as fuels in fast reactors. It is regrettable that much of the research on that has been deferred or handed over to other nations to continue. Further research into magnetohydrodynamics could be valuable as a technology for converting thermal energy directly into electricity, thus avoiding the use of turbines.

The state cannot afford to be out of the race for the development of cheap fuels and, as we are in a technological sector—that is the nuclear industry—I maintain that it should be in state hands.

The nuclear element could seriously embarrass the flotation. The flotation of National Power could be jeopardised by the nuclear element unless funds and guarantees are lavished on the company to eliminate risk. Those, of course, could be repudiated by a Labour Government making the company's position intolerable. For example, should the regulatory system be altered—as happened in the United States in the late 1970s—and the utility is obliged to absorb costs that would normally flow through to the consumer, all orders for nuclear power stations could cease to be economic. We recognise that at some time there will be a change of Government. Heaven forbid that that occurs on the next occasion or the occasion after that, but we live in a democracy.

I suggest to the Minister that the retention of the nuclear industry in a company with a franchise to operate granted to National Power could enable a package of nuclear assets to be assembled—within, say, a decade of flotation, when many of the major problems would have been overcome—and then a subsequent disposal arranged. In other words, it would be possible to segregate out of the 263 present Bill the nuclear industry or the nuclear power complex and defer privatisation to a later date. I am not against its eventual privatisation.

I would further draw to the Secretary of State's attention to the fact that the obligation to build an additional four PWRs of more than 1,000 MW each could embarrass National Power subsequently. Although National Power is being mandated to build four additional PWR power stations of 1,175 MW capacity each, the trend is for the construction of smaller conventional plant and smaller nuclear power stations of 300 MW. The use of the safe integral reactor devised by the UKAEA, Rolls-Royce, Stone and Webster and Combustion Engineering is probably much the best illustration.

It is an interesting speculation whether the £6 billion programme upon which the Government now insist by building Sizewell B and C, Hinkley Point in Somerset and Wylfa in Anglesey could he abandoned if later National Power were to challenge the programme on economic grounds.

There is also a serious risk to the nuclear industry. New technology apart, Britain cannot afford a gradual rundown of the nuclear industry in the United Kingdom due to inaction, economic erosion or short-term energy market considerations. The price of fossil fuels will inevitably rise reversing the competition cycle. I say that because the coal lobby is having a great success at present because coal prices are low compared to what they were 10 or 15 years ago. That situation is likely to alter dramatically. In that case, all the tribute would go back to the nuclear side. There are also certain matters concerning carbon dioxide and sulphur dioxide that could cause nuclear power stations to he favoured.

8.15 pm

I will give an illustration of a lesson to be learnt from Sweden that appeared in the Financial Times on Thursday 22 February of this year. It said: Sweden faces the prospect of a doubling in the cost of its energy production as a result of the planned phasing-out of its nuclear power programme from 1995". That is according to the country's state power authority's own estimates. That is rather significant. One cannot afford to ignore the possibility of that sort of thing happening.

The obligation for the generator to supply under earlier Acts is replaced by a series of contractual arrangements administered by the Director General of Electricity Supply, who in turn will monitor clause 30—that is the quota of non-fossil fuel electricity—and clause 31 on fossil fuel levy. The retention of a nuclear interest in a Crown company could facilitate and simplify those arrangements and more easily regulate the size of the nuclear industry.

I suggest to the Secretary of State that he bears this in mind. I understand that competition is the essence of the Bill under clause 3(1)(c) and that a broader basis of competition is now required. That could be effected with the emergence of at least three competing companies—National Power, PowerGen and British Nuclear. That development would not have to await the fruits of a decade of growth within the private sector.

Nuclear power could furnish the surplus capacity required to operate the privatised system. Both the Secretary of State and the director general are obliged under clause 3(1)(a) to keep the lights burning, which in turn implies the provision of significant reserve capacity to deal with shortfalls in electricity supply. Privatisation will 264 require a much broader margin of capacity to operate the system than in a closely integrated structure. In the United States of America the figure is 33 per cent., in West Germany 50 per cent., and in Japan 49 per cent., as compared with about 20 per cent. in the United Kingdom. A Crown company would enable the Secretary of State to give a specific direction well in advance of likely shortages enabling the company and/or the nuclear industry to act as a "swing producer" for the system. The trouble with the contractual arrangements is that, although they may be subsequently litigated in the courts, they cannot guarantee immediate replacement or response, and a serious interruption in supply could occur. The citizens of New York have had some experience of that in recent years when their lights were extinguished.

It will be fairly obvious that to give a specific direction to any operator will be difficult under the Bill. Clauses 32 and 89 will take time to implement.

§ Mr. Ashton

It is clause 88, actually.

§ Sir Trevor Skeet

It is not clause 88, but clause 89. I shall correct the hon. Gentleman, who did not consider the Bill in Committee and therefore would not be expected to know very much about it.

Both clauses 32 and 89 will take time to administer and there may be procedural problems.

I do not want to take up too much of the House's time, but I must say that the idea of segregating the nuclear industry, temporarily at least, and keeping it in the state sector may appear to be an extraordinary idea to this side of the House, but there is a reason behind it.

§ Mr. Salmond

The hon. Gentleman should not bring his remarks to a close too quickly because the Opposition are an attentive audience. I hope that the hon. Gentleman will explain the relevance of his amendment to the Scottish nuclear industry, because he has spoken about the assets that will go the National Power. The hon. Gentleman correctly surmised at the start of his remarks that I am anopponent of the nuclear industry, but I recognise that technically the SSEB has a better track record than the CEGB. It is important for the hon. Gentleman to address his remarks and the relevance of his amendment to the Scottish nuclear assets.

§ Sir Trevor Skeet

I am obliged for that intervention, but the hon. Gentleman can make his own speech and I will make mine. The system prevailing in Scotland is rather different. How one approaches this matter rests on a question of understanding and judgment.

The CBI is thinking along exactly the same lines as myself as it has suggested that nuclear power stations should remain in state hands. The CBI and Opposition Members may have special motives for saying that—we all have different motives—but we are all searching for the truth. Some Labour Members cannot see the truth, but we are trying to prevent the Government from going straight ahead for the rocks and making problems for themselves. The Back-Bench Member can stand well back from the mountain and appreciate its height. Perhaps the Secretary of State, who is standing under the mountain, is in its shadow and cannot appreciate the height of the edifice. Therefore, it is up to us to point out some of the difficulties involved.

Because nuclear power was included in the Bill, probably against the advice of some of my right hon. 265 Friend's advisers, clauses 30 and 31 had to be introduced. They are hardly in line with market conditions, but one must attempt to reconcile the irreconcilable. Perhaps the Secretary of State has done that. Perhaps he has been able to box the compass in every way and achieve his purpose.

The success of Governments lies in the support that they command at a given time. Provided that they get their legislation through, it is years before the mistakes are noted. If the Conservative party is in power in the future, it will say that an error was made now which certain Back-Bench Members tried to avoid. On the other hand, if the Labour party is in power, it will move from crisis to crisis. It will be faced with so many crises to surmount, that it will be unable to establish the conditions that preceded those crises.

§ Mr. Ian Bruce (Dorset, South)

Does my hon. Friend accept that the CEGB—or Big G as it will be known—will ring-fence the nuclear industry, which will use the support of the main board and its experience? Therefore, to a certain extent, we shall have a separate nuclear industry. I have discussed this with the deputy energy Minister of the Soviet Union who is currently visiting this country. He told me that the people in the Soviet Union are extremely unhappy that the manufacture of nuclear energy and its regulation are all one and the same rather than those functions being separate. It is far better for the Government to regulate and for someone else to manufacture the power.

§ Sir Trevor Skeet

Our system is such that if one gets rid of a nationalised industry—I am glad about that because I support privatisation—one puts in its place regulations galore. There are so many regulations that an industry can hardly move.

Obviously things will settle down in future, but one must decide whether to have a plethora of agreements, negotiated between companies, or a national system with a small focal point. I prefer the agreement system, which I have witnessed operating abroad. We must be careful of some of the arguments advanced by my hon. Friend the Member for Dorset, South (Mr. Bruce). Simply because the CEGB will ring-fence the nuclear industry does not mean that the industry will rid itself of liabilities. Such liabilities will be passed down, virtually into perpetuity.

When the nuclear industry experiences some of the additional costs passed on from British Nuclear Fuels from reprocessing and when, in the next 100 years, it encounters problems as a result of decommissioning—such problems are not apparent yet—it will be a good thing for it to be ring-fenced. Ultimately, however, the nuclear industry will remain responsible for the liabilities that may have been created. At a later stage those controlling the industry may have to go to the Government to say that the financial assistance laid down in schedule 12 is not great enough and that it must be increased by a separate Bill. Almost every year we have seen that happen with the coal industry as its borrowing power has increased. Exactly the same may happen with the nuclear industry, and we may end up giving it a vast subsidy to prevent it from going under. I am not suggesting that that will happen because the management is good and it will do its best.

266 As we pass through this period of great uncertainty, I would be much happier if we left the nuclear industry in the hands of the state. When we begin to understand and solve some of the problems, we will be able to go ahead and privatise and, on that occasion, the public will be behind us.

§ Mr. Tony Blair (Sedgefield)

I congratulate the hon. Member for Bedfordshire, North (Sir T. Skeet) on moving his new clause. When he described the purpose of his clause as protecting the long-term future of energy policy he unerringly put his finger not only on the weakness of this part of the proposal, but on the entire privatisation proposal.

Our amendment No. 160 is similar to new clause 3 as it seeks to take the nuclear industry out of the privatisation process. New clause 16 would oblige the director to publish the details of the difference between fossil and non-fossil fuels. Our other amendments relate to diversity of supply.

Surely when we debate the privatisation of the nuclear industry we debate the most remarkable and inconsistent element of the Bill. The nuclear industry will be privatised, but be subject to no competition. It will be sent to market without market forces. The consumer will be under an obligation to buy a fixed amount of electricity from nuclear sources and, for the privilege of being shackled in that way, pay an additional special tax on his bill. This is not so much privatisation as a rather crude form of economic gerrymandering. The privatisation of the nuclear industry is the achilles heel of the Bill because only a Government whose mind was so gripped by doctrine that they had completely banished common sense could contemplate as hare-brained a scheme as the one that they are entering into now.

§ Mr. Mans

rose—

§ Mr. Blair

I shall give way in a moment.

The Government's insistence on the privatisation of nuclear power has dictated the terms of the privatisation throughout. It has been the driving factor behind the privatisation proposals. The proposed structure of the industry means that we will have Big G and Little G—70 per cent. of power stations in one company. The Secretary of State admitted to the Select Committee that that proposed structure resulted from the proposal to privatise nuclear power.

The Bill contains a special nuclear quota designed to protect the nuclear industry from competitive pressures because it cannot cope with the market as it is. There will be a special levy or tax on consumers to pay for the new generation of nuclear power stations that private investors will not undertake. When it comes to the decommissioning of existing nuclear power stations the taxpayer will be asked to underwrite the risk of existing nuclear power stations even though the profit from the industry has passed into the private sector. In short we have all the disadvantages of the private sector without even the one benefit it can offer from market forces.

As a result of our debate on new clause 3 and associated new clauses and amendments, we appreciate the dilemma in which the Secretary of State has got himself—it is a fairly incompetent position in which he finds himself. As he attempts to tell investors that the nuclear industry is an industry that can be sold, he offends consumers, but, as he attempts to placate consumers, angry that the industry is 267 being sold with them guaranteeing the risk, he of course offends investors. For that reason there is a contradiction written into the Bill between the idea of privatisation and the reality of the special ring fence to be built around nuclear power.

We know—not from a leak that emanated involuntarily from the CEGB but from one that appeared in the Financial Times last November that seems to come directly from the CEGB rather than indirectly as did some of later leaks—that Mr. Baker now believes that the new PWR programme cannot be justified unless the costs are underwritten by the consumer. Similar statements were made by Mr. Miller in relation to the Scottish nuclear industry. Since the Government have introduced a nuclear quota, stipulating that a certain amount of power should be bought from nuclear sources, and since only National Power—at least in England and Wales—can build new nuclear stations—the Government have left themselves in a position where National Power can demand that the costs should be underwritten by the consumer. In the provisions that they have introduced, the Government have effectively acceded to that request.

8.30 pm

On report, we are now hearing about the idea of a nuclear tax to pay for the additional costs of nuclear power—in particular, for the new generation of nuclear power stations. My hon. Friends will remember that that tax was at first denied by the Secretary of State. Then we were told that it had existed all along. Finally, in Committee, we received an admission from the Minister that, at present, it amounts to about £500 million a year, which is about 10 per cent. extra on consumers' bills. Even if all went well, it would be down to only 3.5 per cent. or 4 per cent. on consumers' bills by the end of the century.

The Secretary of State must answer the following question. Once this levy has been introduced, once the new generation of PWRs starts to be built by the privatised industry, what will happen if, contrary to the hopes of Ministers, the costs of nuclear power are greater even than the 10 per cent. extra that they now place on consumers' bills? Is there any limit on the levy or tax that will be paid?

The answer is, of course, that there is no limit at all. As a result of the structure introduced by the Secretary of State, we will be obliged to pay this nuclear tax, or levy, irrespective of what it adds to consumers' bills. Although at one stage in the proceedings, he attempted to suggest that the position would be reviewed by the turn of the century and perhaps then the levy could be taken off, it is difficult to see that happening when the levy exists in order to build a new generation of power stations that will exist well into the next century. The Secretary of State has locked us into a system whereby we have effectively given an open-ended commitment to fund a new generation of nuclear power stations without any ability to subject that commitment to the consumers' considerations.

§ Mr. Mans

Does the hon. Gentleman agree that, as we discussed in Committee, the so-called, possible nuclear levy exists largely to cope with ongoing costs of existing nuclear reactors which will be there regardless of whether the nuclear industry is in the public or private sector? If he is suggesting that existing nuclear power stations should be shut down, the cost to the consumer would be greater rather than less.

§ Mr. Blair

We shall hear from the Secretary of State whether the nuclear levy is there to pay for existing nuclear power stations. I have a different recollection of our Committee proceedings. The question was put time and again to Ministers about whether the levy covered new nuclear power stations that he wants the industry to build. The Secretary of State will tell us—and no doubt the hon. Member for Wyre (Mr. Mans) will listen carefully—if it does not cover existing stations. I believe that the tax exists to fund the new nuclear PWRs.

We have learnt from the Hinkley inquiry that once privatisation takes effect, the key element on cost for this new generation of nuclear stations will be the rate of return on capital required by the private sector. The London Business School puts that figure at about 11 per cent., which is wildly uncompetitive with conventional fired stations. The evidence given to the Hinkley inquiry, which was not particularly contradicted even by the electricity board, was that once the generation of four stations which the Government want are up and running, that would add anything from £400 million to £800 million to people's bills.

Is it not fascinating to reflect on the distinction between the Government's case as presented at Sizewell and that presented at Hinkley. The world has finally been stood on its head at Hinkley. Rather than the building of new nuclear power stations being the justification of the nuclear quota, the Central Electricity Generating Board's evidence at Hinkley shows that the nuclear quota is now the justification for building the power station. The prime motive behind the building of Hinkley power station is said to be because they have introduced a quota system.

The question which the Government must answer—I know that my hon. Friend the Member for Midlothian (Mr. Eadie) has raised it—is why the nuclear industry should be singled out for special legislative protection. Why does that industry stand alone to ensure that the Government's beliefs are realised? In addition, the proceeds of sale will be reduced as a result of the inclusion of the nuclear industry—that is probably where the Secretary of State and I share common ground. The CBI says that many of the City analysts believe that the proceeds of sale will not be substantially—if at all—increased by the inclusion of the nuclear industry. All these complex and complicated structures are the result of the Government's insistence on privatisation.

The Government accept that all these difficulties exist but they say that that is the only way to privatise the industry. They have not yet taken on board in this debate the fundamental point that, if the industry cannot be marketed without guaranteeing the risk of investors—which makes a nonsense of the idea of putting it into the market—the answer is not to market it and not to privatise it in any shape or form. That is the logical conclusion of the Secretary of State's proposal, from which the Government run away.

New clause 16 is reasonable. It says that it will be for the director to publish the difference between non-fossil and fossil fuels. That is entirely right for this, if for no other reason. We are told that nuclear power is uneconomic. The Hinkley inquiry is fought on a basis that has nothing to do with the economic case for that nuclear power station. Many of my hon. Friends will remember that for years we were told that the justification for nuclear power was that it was economic, and that nuclear power stations would provide us with cheap electricity. Given that record within 269 the industry, surely it is reasonable—as we suggest in new clause 16—that, if anyone should scrutinise the difference between non-fossil and fossil fuels it should be the director rather than the industry.

Will the Secretary of State confirm—I have heard that this is so—that the area boards wish to set up an organisation in order to implement the levy? The boards are thinking along the lines of a purchasing agency contracted to them or run by them in order to collect the nuclear levy. We would find that utterly unacceptable. If this is to be done at all, it must be done subject to the proper independent judgment of the director, who can look after the interests of consumers. His objective eye should be on the proceedings so that consumers can see exactly what is happening.

The final amendment in the group deals with diversity. It sets itself modest and, in my view, reasonable objectives. It obliges the area boards to consider the issue of diversity, which is the only case that the Government have left for nuclear power, but gives them freedom of choice as to how they meet that obligation. I believe—and I think that many of my hon. Friends would share my belief—that diversity, the argument now advanced by the Government for the new generation of nuclear power, is merely the latest in a long line of excuses for preferring nuclear at the expense of coal. The amendment accepts diversity, but provides a way of achieving it that is neutral as between different sources of fuel and does not put nuclear in a special, privileged position not occupied by coal, oil, gas and other industries.

§ Mr. David Tredinnick (Bosworth)

Has not coal occupied a special, privileged position for the past 30 years because the CEGB has paid more for it than has been really necessary?

§ Mr. Blair

Exactly the same case could be made about nuclear power. What is interesting about the comments of Mr. Baker in the draft that came—involuntarily—from his office is his letting the cat out of the bag in disclosing that we are already paying a premium for nuclear power. Whatever money may have been put into the coal industry, the hon. Gentleman's argument applies in spades to what has been put into the nuclear industry.

The point that is germane to our present consideration of privatisation is why nuclear is being treated differently from coal. Why is one being made subject to the full rigours of the market and the other not? I believe that the argument about diversity exposes a weakness at the heart of the Government's case. The diversity argument is a very particular type of argument. It is a public policy argument. It is not an argument about market forces or about competition; it is an argument about long-term energy policy. That is what diversity is really about.

On inspection, the only argument for the fossil fuel levy with which the Government are now left is one that refutes the case for privatisation, because it assumes that markets cannot govern energy policy but must yield to the public interest. We may differ on where that public interest lies, but the fact that the Government are now driven to rely on diversity makes us realise that they are driven to accept the impossibility of running an energy policy simply at the behest of the market.

That is the difference between us—not merely on the privatisation of nuclear power or on the question of 270 diversity, but on the case for privatisation itself. That is why, like it or not, when we support the new clause we are supporting the case for a long-term energy policy. We are supporting the case for market forces not to rule that policy. Ultimately, we are putting forward the case against privatisation, which is not in the interests of consumers, energy policy or the country as a whole.

§ Mr. Mans

I wish to speak mostly about the nuclear power industry.

It is clear, probably to both sides of the House, that there is a need for a variety of sources of power, not just generation from fossil fuels. I believe that my hon. Friend the Member for Bedfordshire, North (Sir T. Skeet) would like an increase, if anything, in the amount of electricity generated by nuclear power, whereas I suspect that Opposition Members would like a reduction and would probably prefer the nuclear industry to wither on the vine as an alternative to fossil fuels in the medium and long term.

My hon. Friend gave a number of reasons for feeling that the nuclear sector should be kept public. He mentioned planning. Planning inquiries into nuclear power stations have indeed taken considerable amounts of time; for all we know, however, if we ever wanted to build a new fossil fuel power station in the future that, too, might result in a long drawn out planning inquiry. One thinks of the preliminary steps taken in relation to Fawley B, a new coal-fired power station which is not yet off the drawing board. Before the plan was scrapped it was already clear that the planning process might take as long as the Sizewell process, judging by the protests from that part of the country.

8.45 pm

At present, capital costs are higher for nuclear than for fossil fuel power stations, but the gap is narrowing due to the need to fit environmental devices to fossil fuel stations to meet the increasing demands of the environmental lobby in this country and elsewhere. While there is no doubt that fossil fuel power stations will continue to have an advantage in terms of capital costs, that advantage is bound to lessen in future.

My hon. Friend also made some relevant points about future investment in nuclear power and research and development. Interestingly, since the privatisation proposals were announced a number of new initiatives have been taken by those in the private sector, such as Rolls-Royce, getting together with American concerns such as Combustion Engineering to produce new schemes for nuclear power stations—perhaps, in some instances, smaller power stations. There is no evidence to suggest that, simply because of privatisation, research and development money will no longer be spent on developing nuclear generation of electricity. BNFL is already looking into feasibility studies on replacing the two Magnox stations at Calder Hall and Chapelcross, perhaps with a modified PWR design. That, too, is a private sector initiative and shows that there is a future for nuclear power in the private sector.

It is also worth mentioning that the running costs of nuclear power stations—as opposed to the capital costs—are certainly of the same order as those of fossil fuel power stations, if not cheaper.

§ Mr. Beith

The hon. Gentleman confused us all by suddenly referring to a series of power station proposals as 271 though they had emanated from the private sector rather than from the publicly owned nuclear sector. Will he clarify what he was talking about?

§ Mr. Mans

I cited Rolls-Royce as one private sector company—a privatised company, indeed—which is very much involved in discussing the production of smaller nuclear power stations, but that is just one example and there is already talk of similar plans in areas outside the CEGB. There is evidence that new initiatives are being taken as a result of the privatisation proposals.

One of the most significant points, mentioned only fleetingly in Committee, is that most of the nuclear power stations are right at the top of the merit order in which power stations are brought on line within the CEGB. That shows, if nothing else, that in purely running cost terms—as distinct from the capital costs of the new process—the generation of power by nuclear means is as cheap as fossil fuel generation. It shows that the nuclear industry has a future as an alternative means of generation in the private as well as the public sector. I therefore see no reason for it to be kept in the public sector.

I submit that in the future, with the increasing environmental restrictions on the generation of electrical power by fossil fuel means, nuclear energy will become a much more viable alternative. For that reason alone development should continue, and should continue in the private sector.

§ Mr. Malcolm Bruce

This debate is an interesting one, and the hon. Member for Bedfordshire, North (Sir T. Skeet) is to be congratulated on tabling his amendment, which is remarkably similar to one that I tabled at the same time—indicating that there is some common thinking even though, as I freely acknowledge, we approach the problem from totally different directions.[Interruption.] No, I do not disagree totally. That is not the point at all. I think that the hon. Gentleman and I agree on one thing—that the Government have got themselves into the rather ludicrous position of trying to advance the argument of rhetoric—bringing the electricity industry to market and then having to force a rig into the market to distort it. The hon. Member for Bedfordshire, North quite rightly says that this is a piece of nonsense. Why should not the Government operate more honestly, admit that there is a fix, take the nuclear industry out of their rhetoric, and leave the market to operate in the area of the electricity industry where it can more easily do so?

What I find interesting is that for 10 years of Conservative Government successive Secretaries of State have said, in effect, that the Government's policy on energy is not to have a policy. While the industry has been substantially in the public sector, there has been no policy, but now that it is to be privatised the Government have suddenly produced an energy policy—a policy which applies only to nuclear power. Nuclear power, we are told, is required for strategic reasons, but it is not fitted into a grand debate—we are not let into the inside thinking as to exactly what the Government's judgment of the strategy was. Certainly, it does not appear to have been produced by a radical reassessment of all energy options—weighing them up honestly and objectively, and then coming to a conclusion as to exactly where they might fit into a planned, or free market, or hybrid scenario.

We know perfectly well that from the outset the Government have begged every question, determined to 272 have nuclear power. They knew that once they were committed to privatisation there was no possibility of making nuclear power stand up in the market place on ns own merits, so they introduced this extraordinary Bill, which creates this distortion. Among means of generating electricity, nuclear power is given a unique, distorted and privileged position, which will disadvantage the consumer and other players in the electricity supply industry. That is why, on the question of nuclear power, the hon. Member for Bedfordshire, North came up with a view similar to that of my colleagues and myself.

I think that it was last year, when the privatisation process was put in motion, that the Secretary of State said that the case for nuclear power would have to make itself. However, it could not make itself and it has not made itself, so the Secretary of State has had to introduce a fix in the Bill to take account of the inability of nuclear power to make a case for itself.

A number of factors need to be addressed. First, those of us who have a different view of energy priorities are at least entitled to argue that if we were allowed to determine which particular sector should be given a specific advantage it would not be the nuclear sector. It might be conservation. Certainly conservation ought to be the highest priority of this country, and it is one issue on which the Government can take positive action and make things happen. There could have been a decision to increase the use of natural gas—a much cleaner fuel, of which there is a great deal in the North sea. We could have made a very useful bargain with our Scandinavian neighbours. That would have been of substantial benefit for our medium to long-term energy requirements are concerned. Those options could have been pursued, but the Government did not even allow them to be explored because they had their own priorities.

§ Mr. Hardy

The hon. Gentleman is making a very interesting point. Does he agree that the Department of Energy was in favour of the Sleipner deal but that, for reasons of international finance, and because of the need to avoid the sort of trade deficits to which we are becoming accustomed, the Treasury opposed it?

§ Mr. Bruce

I do not accept that. Perhaps the Treasury knew something then that has only come home to roost now. There is no doubt at all that British Gas and the Department of Energy, left to operate freely, would have gone for that system. Indeed, if we had gone in early enough, when BP first mooted it, there could have been substantial benefits to the whole United Kingdom, both economically and in terms of energy.

It is interesting that the Government have decided that in one part of the United Kingdom—Scotland—there will be a separate nuclear company. Admittedly, it will not be an independent company but a subsidiary of the Scottish electricity companies. Nevertheless, the separation of the nuclear industry has been acknowledged as something that is tidy, at least in Scotland. The Government are therefore being somewhat inconsistent in not accepting that England and Wales, or indeed the whole United Kingdom, might benefit from having a single nuclear company.

As the hon. Member for Bedfordshire, North indicated, the nuclear industry is facing a very uncertain future. It was quite interesting that the hon. Member, who is as strong and enthusiastic a supporter of nuclear power as I am an opponent of it, gave us a very substantial list of 273 uncertainties, escalating costs, drawbacks and disadvantages. That that was from somebody who is in favour of the industry is an indication that serious questions have to be faced which the Government's Bill simply fails to address.

Certainly the cost has escalated. It has already been said today, and was said many times in Committee, that it is extraordinary that up to about two years ago we were told, in spite of the obvious information to the contrary, that nuclear power was the cheapest form of electricity available. Now we have been told that those of us who said that it was dear were right all along—that it was, and has been, the dearest form of electricity available. Throughout that time, those of us who said that it was expensive were told that we were entirely wrong. The consumer, in the Secretary of State's words, has been paying a nuclear levy—the high cost of nuclear power—all that time.

There are increasing problems for the nuclear power industry. First, the cost of reprocessing is rising at an unpredictable and rapid rate. Sellafield has been faced with threats of closure by the nuclear inspectorate because of its inability to meet acceptable safety and operating standards. A private industry which is dependent on reprocessing—that is bad enough, because it is expensive—also has to face the possibility of being totally paralysed if the only reprocessing facility in the country were closed down on safety grounds. The commercial risk of being bound into that system is clear. If I were asked to take that risk—as, indeed, I and all other members of the public are being asked—I should not want anything to do with it.

The problem of decommissioning is also creating uncertainty. That, too, is coming home to roost. The first nuclear power station is moving into its decommissioning phase. When we look back five years from now, I shall be interested to see what the actual cost of that decommissioning to date proved to be. The amount that we are told has been estimated and put aside is £300 million, but those who have been involved in decommissioning experiments in Canada have found that it costs many times that amount. Estimates suggest that the decommissioning of a significant nuclear power station may cost £2 billion—more than the cost, at current prices, of building one.

I accept that these are only ball park estimates by people who may not be totally unbiased, although the Canadians have had experience of decommissioning a nuclear power station. Nevertheless, it may prove to be substantially more expensive than has been budgeted for. The Bill provides for a substantial sum of money to be set aside for decommissioning, but the industry may find that the substantial amount of money to be advanced by the Government is inadequate. The industry faces considerable uncertainties, all of which could add substantially to the cost.

9 pm

The biggest problem of all that the industry will have to face is that of waste disposal. The costs and the practicalities of waste disposal cannot be fully quantified because no acceptable system for waste disposal has yet been devised. We must not take short cuts when dealing with waste disposal. It would be much better to store the waste on site in an area where it could be safely monitored than to transfer it to another site for reprocessing. The 274 problem with nuclear energy is that, the more material one handles, the greater the volume of waste one creates. The industry must confront the problem, and the consumer and taxpayer will also have to face up to it. So must the shareholder. I hope that the Secretary of State acknowledges that.

We are told that the private sector is to be given the opportunity to exercise its commercial judgment in an uncertain market, and the Secretary of State tells us that it will do so far more efficiently than the public sector. However, shareholders are to be told that they will not have to take a risk. The Secretary of State should acknowledge that the shareholders will have to take a risk. The hon. Member for Bedfordshire, North referred to the fact that the regulatory system is likely to be changed. It will almost certainly be changed. It will have to be modified in the light of experience. As and when the political complexion of the Government changes, the regulatory system will undoubtedly be changed. At that point, taxpayers are unlikely to be interested in providing substantial compensation for electricity industry shareholders.

The hon. Member for Bedfordshire, North believes that at some unspecified time flotation may take place, but my proposal is the more honest way to deal with the industry. The Secretary of State's criticism of the over-centralisation of the Central Electricity Generating Board is legitimate, but it has been blurred by the need to create the fossil fuel levy, the non-fossil fuel quota and the nuclear levy. That has distorted the framework of the Bill. It would be in much better shape if at the outset the Government had taken the advice of the hon. Member for Bedfordshire, North, kept nuclear power in the public sector, argued that there were strategic reasons for keeping it there and considered how to privatise the rest of the industry, which I accept is much more open to normal market forces and competition.

Furthermore, I would not privatise the industry until I had proved that a genuinely competitive industry could be created. That would be possible in other parts of the electricity supply industry, but the Government are privatising an industry that has built into it a substantial financial drag—the nuclear power industry. The Government have tried to ring fence it against risk and the foreseeable escalating costs that the industry faces, but they have been unable to take all the uncertainties fully into account. They will therefore find the City and the market less than enthusiastic about privatisation because it has not been thought through and properly worked out. The Government have created a monster which will return to haunt them.

§ The Secretary of State for Energy (Mr. Cecil Parkinson)

I hope that the House will not object if I intervene now to reply to the debate on the new clause and to speak to a number of Government amendments. After I have dealt with the new clause and spoken to the Government amendments, I shall listen to what is said about them and then reply to those comments.

The reasons for Government amendments Nos. 31 to 34 are straightforward. Under the present proposals, the nuclear obligation will be set once by order. We believe that that is too rigid. During the next 12 years, Magnox stations will be going off stream and PWRs will be coming on stream. However, it may not be possible to synchronise it so that, at any given moment, the amount of capacity 275 that is needed to meet the obligations is available. Therefore, we are amending clause 30 so that we place before the House orders that will recognise the practicalities. That does not represent any change of policy. Our intention is still to fix the obligation at 15 to 20 per cent., but we need flexibility for the reason that I mentioned. Power stations will be going out of commission while new ones are being built.

Another reason, which I believe the House will accept, is that we are aware that although we have set a non-fossil fuel obligation and wish to see renewables come on stream, at the moment there are no sources of renewable energy that could meet a significant part of that obligation. The distributors will be signing up to meet their obligations for non-fossil fuel.

We want to create a new tranche of capacity that is reserved exclusively for renewable sources of energy. We do not expect it to be very large between now and the year 2000. It will be between 200 and 600 MW. It is important to develop renewables. We want to have the right, therefore, to vary the order. There is no point in creating a non-fossil fuel obligation to be met by renewables if they do not exist. We want to have the right to modify the non-fossil fuel obligation to take into account the development of renewables and we shall be reserving a special tranche for that purpose. That is what the four amendments are designed to achieve.

I have listened with great interest to the debate. I mean no offence when I say that the arguments had a certain familiarity about them. We have been debating the subject at regular intervals for about three months. I shall repeat the Government's position. In particular, the hon. Member for Gordon (Mr. Bruce) grossly misrepresented the Government's position. The Government were elected on a commitment to maintain the nuclear power programme and to privatise the electricity supply industry. I have made it clear in every speech that I have made that we recognise that the non-fossil fuel obligation is a distortion of the market, but we believe that it is a worthwhile distortion, for these reasons.

We believe that security of supply is absolutely vital. We believe that diversity is the basis of security, and that has been my argument since the day I took office. I believe passionately that diversity of sources of energy is a vital part of ensuring the security of supply. In case there are hon. Members with short memories, may I say that we have had at least three major incidents in the past two decades which have underlined the value of nuclear—the two oil price explosions and the miners' strike.

Without nuclear during those three major incidents, this country's supplies of electricity would have been put at risk. I have said this before and I will repeat it because, although it annoys Opposition Members it is true: without nuclear during the miners' strike, Mr. Scargill would have won. So we believe that the case for diversity has been made three times and that it would be an irresponsible Government who did not learn from those experiences.

§ Mr. Blair

What about oil?

§ Mr. Parkinson

The hon. Member for Sedgefield (Mr. Blair) asks me to talk about oil and that is precisely the point that I am going to make now—the volatility of fossil fuel prices, even since this Bill was introduced. In the past six months the price of oil has moved from $12 a barrel to $20 a barrel, and there is no one who does not believe that 276 in future oil prices will move gradually, inexorably and inevitably in one direction—upwards. So we need diversity of sources of supply to give us the necessary security.

We were elected on a promise to privatise and a promise to maintain a nuclear programme. We are determined to honour both those promises and also to make sure that those who benefit from diversity contribute to the cost; that is the reason for the non-fossil fuel obligation, which will enable us to meet both our commitments. It will enable us to privatise and it will maintain the nuclear programme.

Let me repeat once again a remark that I have made over and over again but which the hon. Member for Sedgefield simply cannot or will not understand. The non-fossil fuel obligation does not increase or decrease costs; it opens them up for public inspection. Now, for the first time, as a result of our proposals, the public is being told what nuclear costs are and it will have set out for it every year the difference, if there is one, between fossil fuel prices and prices of nuclear. So the Government are not in any way hiding the costs of nuclear. For the first time the public is being told what the costs of nuclear are.

§ Mr. Blair

The hon. Member for Bedfordshire, North (Sir T. Skeet) asserted that it was no part of the function of the nuclear levy or tax to cover the cost of the new pressurised water reactors. Does the Secretary of State agree with that?

§ Mr. Parkinson

I will deal with that point in my own good time. The point that I wish to make now is that nuclear costs are being incurred at present and that if, God forbid, we had a Labour Government tomorrow, the nuclear costs would continue to be incurred because we need the capacity that the present nuclear stations give US. So there would be no change with a change of Government, and the costs of nuclear would continue to be what they are—the costs.

What we are arranging to do is to expose those costs. So in 80 to 85 per cent., of the market we will have competition in the supply of electricity and in the 15 to 20 per cent. met by nuclear we will, for the first time, have transparency: people will know what they are paying for.

9.15 pm

What I find particularly puzzling about Opposition Members is that they continue to attack us for exposing the costs of nuclear and to defend a system which conceals them. At present, the cost of nuclear is wrapped up in the bulk supply tariff, and nobody knows precisely what it is.

§ Sir Trevor Skeet

rose—

§ Mr. Parkinson

Whatever it is, every electricity user in this country pays it. It is being paid now and the fact that it becomes known and identified will neither increase nor decrease it.

Again, privatisation will not increase the nuclear component. In fact, ironically, for the first time the public is being consulted through Parliament about the level of nuclear provision. Were we not to have come forward with this Bill, it would have been declared CEGB policy to build four PWRS initially, with another five by 2003; so privatisation is not producing more nuclear power; it is exposing the costs of nuclear power and ensuring that the public, through Parliament, is consulted about the level of the nuclear obligation.

§ Sir Trevor Skeet

rose—

§ Mr. Parkinson

The hon. Member for Sedgefield gives the impression that somehow or other privatisation has put nuclear in a privileged position. Privatisation has put the first four PWRS in a privileged position, but the rest of the programme will have to be settled on is own merits by Parliament. The system that the hon. Member for Sedgefield and the hon. Member for Gordon defend would have imposed on the country a huge nuclear programme, would have wrapped up the costs in the bulk supply tariff —the plans are already made—and the public would have had to accept them on its own cost-plus basis.

§ Mr. Blair

rose—

§ Mr. Parkinson

That cost-plus basis is the basis on which the public has had to pay for nuclear from day one.

So here we have a position in which the Government are prepared to declare their commitment to nuclear, prepared to reveal and justify the costs and prepared for the first time to tell the public what they are. Opposition Members defend a system which imposes these things on the public without consultation.

§ Sir Trevor Skeet

The Secretary of State makes some very astute observations. May I ask him a simple question on costs? What is the difference in cost to the state with the nuclear industry inside and with the nuclear industry outside the state system?

§ Mr. Parkinson

I will explain in a moment why I believe that, although there are difficulties with nuclear—and I do not deny them—even with those difficulties the nuclear component is far better in the private sector and that the country will be far better off having it in the private sector.

§ Mr. Blair

I want to correct the Secretary of State on one point. It is the most extraordinary drivel to say that the electricity generating board would have insisted on the nuclear reactors and that somehow the things are now up for choice. The Government have already made the decision anyway; the inconsistency is having made the decision by giving the ring fence of nuclear power and then putting it in the private sector. The Secretary of State has said that the nuclear tax covers these four PWRs. Supposing that the hopes on cost are wrong and that we find that those PWRs are considerably more expensive than conventional plant. Is it not the case that under his proposals the consumer will pay the difference?

§ Mr. Parkinson

The consumer always pays the difference, as he does under the present system. The difference is that those costs will be exposed and the cost of the electricity will be exposed, and if the public does not like those costs it will have a choice about whether it will pursue a nuclear policy. I believe that it will. I believe that the arguments for nuclear will become stronger and are becoming stronger day by day.

I mentioned the volatility of fuel prices. We are now seeing a growing world awareness of the dangers of being over-reliant on fossil fuels. We know about the greenhouse effect, the acid rain effect, the generally polluting effect of fossil fuel-produced electricity. I believe that the arguments will move firmly in the direction of more nuclear in the years ahead. But nuclear will not be imposed on an unwilling country as it has been in the past, by 278 Labour Governments in particular. In future, it will have to justify its existence, after the four PWRs that we are committed to helping the industry to build.

I repeat that it is not privatisation that is ring-fencing the nuclear programme for the first time. The nuclear programme has been imposed on the country by successive Governments and we are maintaining the existing level. We are not increasing that level and we are not reducing it; we are simply maintaining it.

My hon. Friend the Member for Bedfordshire, North (Sir T. Skeet), who wanted to keep the industry in the public sector, and the hon. Member for Sedgefield disagreed on just about everything else; there was not a single word in my hon. Friend's speech that the hon. Gentleman could really support. My hon. Friend suggested that keeping the industry in the public sector would help. I believe that that would be fundamentally wrong, and we have the experience of the past to prove it. The history of the British nuclear programme—a history in which the Labour party played a prominent part—is littered with appallingly wrong and bad decisions.

The AGR programme has been mentioned in the debate. We have heard a list of stations which were 18, 17 or 16 years late. That programme was imposed on the country by a Labour Government. They chose the wrong technology. They imposed it on industry. The programme was carried through in an appallingly incompetent fashion. There was a total lack of financial discipline and management.

Already, simply as a result of the threat of privatisation, we see a change in attitude. The CEGB is starting to drive hard bargains with its suppliers. Now that it is aware that it is no longer in a cost-plus position, the CEGB is talking to BNFL about not getting fixed price contracts and no longer being at the mercy of BNFL's cost-plus mentality. Why is the industry coming to see me to argue the case for help and protection? It is because it recognises for the first time that it will not be in a cost-plus position and that it will not be in the position, in which Labour Governments would leave it, and which it would be in if it were in the public sector, of being able to spend whatever it likes and passing the cost through. There is the beginning of financial discipline in an area where there has been none, and where there would be none if the programme stayed in the public sector.

§ Mr. Morgan

In the light of the disparaging remarks that the Secretary of State has just made about the AGR programme, if the CEGB and its successor company, National Power, were to propose not to operate the AGR stations that are coming on stream this year—Dungeness B, Heysham 2 and Hartlepool—and merely kept them in reserve so that they qualified under clause 30 as capacity available—if the nuclear levy could be reduced by not operating them but merely having them as reserve capacity —would the Secretary of State agree to that suggestion?

§ Mr. Parkinson

A very large sum of money has been spent on the AGR programme and we are now at the point of seeing improved performance from those stations. A substantial part of the expenditure has had to be written off, but it is now producing results, albeit 10 to 15 years late. Opposition Members ducked sharply when we pointed out that in one of those leaked documents, which were the only research that they seemed to do in Committee, the industry had announced that it would 279 have to write off £1,600 million of taxpayers' money because of the bad decisions taken exclusively by Labour Governments on the AGR programme.

We want to get the whole of the industry into the private sector. We want to get away from political influence and political impositions. We want to put the industry in the hands of commercial management. Even though there will be less competition in nuclear than we would wish, we believe that it will still be better managed, better off and more accountable if it is in the private sector.

We have heard some remarks about what the CBI wants. We have been told that the CBI wants a nuclear programme, that it wants it to stay in the public sector and then that it wants it to be floated off to create a competitive third force. My view is simple: what the CBI wants is the benefit of the security that comes from nuclear, but it does not want to make its contribution to the cost. Not only is the non-fossil fuel obligation a useful means of encouraging the development of the next generation of nuclear power stations but it is a way of ensuring that everybody who benefits from that diversity and security makes a contribution.

The hon. Member for Sedgefield asked how the system would work. I explained in Committee that there will be collective purchasing, through a company set up for that purpose, by all the area boards of the production from the nuclear stations. That production will be sold at the fossil fuel price to the area boards. If there is a difference and if the cost is higher than the selling price, that will become the levy, and that levy will be paid by all who use electricity. It will not be possible just to impose it on the domestic customer, which is what some people in industry argue for. The non-fossil fuel obligation will encourage the development of nuclear power stations but it will also ensure that the cost of those stations is fairly borne.

We believe that new clause 16 is unnecessary. It will be the director general who will compute the levy. It will be his job to decide the correct level of the levy and to publish it. It will also be the job of National Power separately to account for its nuclear production. That also for the first time will become transparent and people will know what they are paying for, but the director general will be part of the process of setting the levy; he will oversee it.

Amendment No. 148 proposes an interesting development. For the first time on behalf of the Opposition the hon. Member for Sedgefield recognised tonight the importance of diversity as a source of security, but in classic muddled Labour fashion. Having identified it as something desirable, they then make arrangements for it not to happen. They make a proposal for a vague system that encourages people to think about the possible benefits of diversity. We are not mealy-mouthed. We believe strongly that nuclear is the main source of diversity. As a result we are prepared to commit ourselves to justify our policies.

We noticed in Committee that the hon. Member for Sedgefield becomes remarkably coy if questions are addressed to him. When we ask him if he would close down the nuclear stations we get no answer. We point out to him that Cleveland Bridge is on the edge of his constituency and is very dependent on the nuclear programme; when we ask him if we may tell people there on his behalf that they will be out of a job, he looks coy, rushes off and talks to his journalist friends.

280 9.30 pm

When we got to questions of coal and Mr. Scargill, the hon. Member for Sedgefield handed over to his hon. Friend the Member for Rother Valley (Mr. Barron) and made arrangements not to be in the Committee Room, so he was not there while the arguments about coal took place. I was there, and I witnessed the hon. Member for Sedgefield achieve the impossible—of being present, but not in the Committee Room, for most of the time. [Interruption.] The hon. Gentleman is happy with his rhetoric and heated speeches, but we never find out in what he believes. We only know that he is opposed to privatisation, although we read in The Times that privatisation will stay and that the structure which we are putting in the private sector will remain for many years, because it will be a long time before there is a Labour Government. In any case, they would only tighten up the regulatory system. In other words, we hear a great deal about what is wrong with our proposals, but Opposition Members have no real plans for changing them. They would only regulate them a little, should they ever get the chance to do so.

We are asked, in connection with amendment No. 147, whether it would be appropriate for consumer committees to be involved in making the order setting the non-fossil fuel obligation. We believe that that is a matter for Government and Parliament—that it is for Government to make their proposals to the House, and we intend to do that. We do not think that local consumer committees would have a great deal to contribute to the setting of the non-fossil fuel obligation. That job is better done here in Parliament.

The House has had from the Opposition, and in particular from Labour Members, a typical piece of Labour escapism. They know full well that, in the nuclear programme we have, the nuclear stations owe much to policy decisions taken by them; they know that they cannot be closed; they know that we need them to ensure the security of the system; and they know the cost and object to the fact that we will expose the cost and argue the case for diversity instead of imposing it on an unwilling country. Nuclear has a great contribution to make. We are prepared to argue the case, to expose the cost and to have a transparent system.

I hope that my hon. Friend the Member for Bedfordshire, North will change his mind about pressing his new clause and that my hon. Friends will join me in exposing Opposition Members as a bunch of bogus no-hopers who have nothing to offer but criticism.

§ Mr. Ashton

We have just heard a remarkable speech from the Secretary of State. He began by saying that the Bill was designed to take the decisions out of politics and allow costings to be made without regard to political issues, but immediately went on to make a political speech, using the need for nuclear power to slap down the National Union of Mineworkers. Nothing has been said in the debate so far about the part played by gas turbines or about the new EEC regulations concerning the surplus of gas in the North sea and its use for generating electricity. That issue has immense ramifications for my constituency and in particular for West Burton B, the proposed coal-fired power station.

About two years ago the right hon. Gentleman who is now the Secretary of State for Wales, then Secretary of State for Energy, astonished the House one Question Time 281 by saying that he would approve the building of a new coal-fired power station, West Burton B, close to West Burton A, in my constituency. The CEGB, which we had been lobbying for at least two years, said that it was keen to have that power station because planning permission for it had been agreed and it could be built quickly. It was pointed out that West Burton A already existed, that the roads and railway lines were there, that it would be handy for the river and that it would be close to the rich coalfields of Nottinghamshire. Indeed, the CEGB said in a publicity handout that it would be planned to be in operation by 1995. It would be a large station with a generating capacity of 1,800 megawatts. Decisions have to be made soon because it takes about five years to build a coal-fired power station. The then Secretary of State for Energy made his announcement a month before the general election. There were marginal seats in Nottinghamshire, there had just been a coal strike and there was much conflict between the NUM and the Union of Democratic Mineworkers. Today, more than two years later, not a sod has been turned or a brick laid. We continue to have only promises.

That power station was expected to create 2,500 construction jobs during the five years that it would take to build it. In my constituency there is 17 per cent. male unemployment in Worksop. A further 600 jobs were to be created in running the power station and many more running the railways, building a new road and even supplying fish and chips to the canteen. It was said that West Burton B would be given priority by the CEGB. It would have preferred Fawley in Southampton, but there were objections there because of property values. As there were no objections to West Burton B, it was agreed that the plan should go full steam ahead. All the councils agreed to the planning regulations.

Every time I have tabled questions to the Secretary of State for Energy about why he has not given his approval, he has said that there have been delays with the local councils on planning regulations, but the local councils agreed 41 out of 42 planning regulations very rapidly. The remaining one was whether a minor road should be straightened out before or after the power station was built. There has been no delay in deciding planning conditions for the power station, but we are still awaiting a decision.

The power station would keep five pits open. It would burn anything up to 5 million tonnes of coal a year. In Nottinghamshire, where the UDM supported the Conservatives throughout the miners' strike, the Conservative majority for the hon. Member for Sherwood (Mr. Stewart), who is not in his place tonight, went up from 600 to 4,500 and the majority of my hon. Friend the Member for Mansfield (Mr. Meale) fell to 56. UDM members were promised continually that they would be looked after by the Conservative Government, and the promises continued until the last general election, but when it came to delivering those promises nothing happened. Since then there has been nothing but delay.

In desperation, I turned to the CEGB and asked Lord Marshall of Goring, "Do you intend to build the power station? Where do we go from here?" He wrote me a very friendly letter: Dear Joe…It is no longer our decision whether or not to go ahead with West Burton. There is excess gas in the North Sea and the EEC Regulations have now changed so 282 that it is permissible to burn gas to make electricity … the options now include building coal stations or to build plant with combined cycles of gas turbines with steam turbines. At the moment I really have no idea what choice the Area Boards will make. In my opinion it is the answer to this question that will determine the future of the West Burton project, and the hesitation you see is not due to our final discussions on planning matters. The Area Boards must give us a decision about the Fawley coal-fired station within the next few weeks, but it is only fair and realistic for me to tell you that I do not think we will get a decision from them concerning West Burton until a later date. So the whole project is back in limbo. We were told that if there were a bad winter in 1992, the CEGB would have to have power cuts because it would not have sufficient capacity to meet demand. That was the urgency for West Burton B. Everyone knew that the Government did not want a coal-fired power station and would have preferred a nuclear power station, but they knew that it would take two or three years to get planning permission for another Sizewell or nuclear power station and there was already planning permission for West Burton.

So why is there a delay? I will tell the Secretary of State why I think there is a delay and I hope that he will come clean and tell us the real reason. I think that he does not want to saddle the new buyers of the electricity industry with a £1,000 million debt for the new coal-fired power station. He knows as well as we do that under the old nationalised industry, the CEGB used to run at 80 or 85 per cent. of capacity. It could not afford to run any higher or faster than that because if there had been power cuts because it was too close to capacity there would have been a political uproar and an outcry against the Government's mismanagement of a nationalised industry. But when the industry is sold off the private people can run it at 99 per cent. If there are power cuts and they have not provided enough capacity, they either import more from France to take the place of Fawley power station or say, "Hard lines, there will have to be cuts in consumption or electricity will go off at peak periods." They will be able to get away with that because the industry will be privately owned. New clause 16, which shows the difference in the price of electricity, must therefore be implemented.

Another factor may be that the buyers of the industry want a coal-fired power station but do not want such a power station burning coal at the present price. If they can delay the building of the power station for five or 10 years and in the meantime two new ports are built on the Humber—there is a Bill before the House dealing with that —they will be able to import cheap coal from South Africa, China, South America, Poland or elsewhere. That would make it more profitable. By that time, more pits in Nottinghamshire and south Yorkshire will have closed. That is probably the reason for the delay. The costings will be done again on the basis of cheap imported coal rather than whether, on present costings, coal is cheaper than nuclear power.

The Library research document says that clause 16 is most important. It offers a private supplier an escape if there is a power cut caused by circumstances "not within his control". That means that a heavy snowfall or excessive cold could be circumstances "not within his control" and there could be power cuts which might be disastrous for anybody dealing with a frozen food factory or freezers in houses. Yet in such circumstances the private supplier would be protected.

§ Mr. Jonathan Sayeed (Bristol, East)

The hon. Gentleman subscribes to the conspiracy theory as to why something has not happened, but could it not be that the generating authority is looking at combined steam and gas generation as it is likely to be cheap and much cleaner?

§ Mr. Ashton

That is the latest proposal as a result of EEC regulations. However, as Lord Marshall said, it is no longer his decision. When the Bill is enacted and the industry is privatised, as it will be in a few months, everybody can wash his hands of it and say, "It is nothing to do with me." For two years, the ball has been kicked from the Secretary of State to the CEGB and the local councils have been blamed. If the power station were to be built, five pits would be kept open. That power station should now be 2ft high and due for completion in 1992.

There is a financial consideration and many jobs are involved. We are talking about the future of the pits and of the area, but we cannot get a decision from the Secretary of State. He will not nod his head and say, "Go ahead." He wants to delay until after the Bill is enacted and the new ports are sucking in cheap coal. If he cannot give us an answer at the end of the debate, I hope that he will agree to meet a delegation from my local council and the coalfield community so that we can sit round a table and thrash this out rather than having to debate it in the House.

§ Mr. Michael Irvine (Ipswich)

It was startling enough to hear my hon. Friend the Member for Bedfordshire, North (Sir T. Skeet) advocating retaining the nuclear element of the power generating industry in public ownership, but it was even more startling to hear some of the arguments that he put forward in favour of that proposition. I heard him saying, for example, that one of the key arguments in favour of retaining the nuclear element of the electricity generating industry in public ownership was the fact that in constructing nuclear power stations, cost and time overruns were frequently encountered. He mentioned Hartlepool power station, which took 19 years to build, as an example. I can trump that by mentioning Dungeness B, which took 20 years to build. My hon. Friend drew from this conclusion that the nuclear element of the power generating industry should be retained in public ownership.

9.45 pm

I draw the diametrically opposite conclusion—that it is about time such things stopped. No private industry could possibly countenance such cost or time overruns. State corporations can and do tolerate such inefficiency. It is about time that that was put to an end and I am glad that the Bill will do so.

While listening to my right hon. Friend the Secretary of State, I noticed that there were 12 Labour Members sitting opposite him. Of those 12, no fewer than 10 represent coal mining constituencies. I looked across the Chamber and my eyes encountered the steely glare of my old adversary, the hon. Member for Ashfield (Mr. Haynes), a miner himself for many years and an official of the National Union of Mineworkers. I looked along the Bench and saw the hon. Members for Rother Valley (Mr. Barron) and for Sedgefield (Mr. Blair) and behind them the hon. Members for Pontefract and Castleford (Mr. Lofthouse), for Bassetlaw (Mr. Ashton), for Midlothian (Mr. Eadie), for Rhondda (Mr. Rogers), for Wentworth (Mr. Hardy) and for Hemsworth (Mr. Buckley).

§ Mr. Allan Rogers (Rhondda)

Whom do you represent?

§ Mr. Irvine

I represent 68,000 consumers in Ipswich.

Another hon. Member who was present then, but who is not here now, was the hon. Member for Barnsley, Central (Mr. Insley). He had the distinction of being the chief administration officer of the National Union of Mineworkers form 1984 to 1987. In Committee, I called him the high priest of the mining interest and that was a fair description.

I make no criticism. Those Opposition Members are right to be here to represent their constituencies and to put forward the case for the coal mining industry. But we should remember that they have that particular vested interest at heart and that the case that they put forward, very properly, is the case of that particular vested interest. It is interesting to compare the scale of their turnout with the overall turnout of Labour Members.

§ Mr. Haynes

I am going to deal with you.

§ Mr. Irvine

I heard something of a threatening remark pass across the Chamber.

§ Mr. Speaker

Order. I hope that it was not an unparliamentary threatening remark.

§ Mr. Irvine

In my judgment, it was near the borderline, but probably not quite over it.

In his speech earlier, the hon. Member for Sedgefield asked why the nuclear industry has been singled out for special treatment. I can give him one very good answer, which is at the heart of the case made by my right hon. Friend the Secretary of State. Having a nuclear-generated element in the power industry means that there is that much greater diversity of supply. The hon. Member for Sedgefield said that the argument about diversity of supply was the only case that the Government had left. He said it in a derisory and mocking manner. Whether or not it is the only case is immaterial because it is a very good case and goes right to the heart of the Bill.

My right hon. Friend the Secretary of State made the point that oil was subject to rapid price swings. He mentioned how, in the six months since the Bill first started on its way through the legislative processes, the price of oil had risen $12 a barrel to nearly $20 a barrel. That is a significant argument against relying too much on oil as a source of generating energy.

Coal has been just as erratic and dangerous a source of supply. During the past 20 years the generation of electricity in this country has been threatened by major strikes three times. The last one in particular was a highly politically motivated strike. The generation of electricity was threatened in 1972, again in 1974 and most crucially in 1984–85.

Therefore, it is entirely right and proper that while giving market forces due rein and producing the efficiency and the benefits that market forces can bring the Government should, in a very undogmatic, pragmatic and common-sense way, treat the nuclear element of the industry as a special case. It is absolutely right that it should be treated as a special case because it will add to the diversity of our electricity supply. Greater diversity of supply ultimately means greater security of supply.

§ Mr. Eadie

I understand that the hon. Member for Ipswich (Mr. Irvine) made the same speech in Committee. 285 Probably the only good thing about it was the advertisement that he gave to my hon. Friends' assiduous attendance during the debate.

I find it strange that the debate seems to have developed into an advertisement for nuclear power. I found it a bit rich when the Secretary of State decided to intervene to rubbish existing British nuclear technology and came out in favour of the PWR. We in this country have never had a PWR. As I have said before, we are building an American-British bastard version of a PWR, which has not yet worked. When we are talking about efficient technology and advertising nuclear power, I advise the House to look back at the history of nuclear power in all countries because when there is a new nuclear generator and a new generation—

§ Mr. Sayeed

rose—

§ Mr. Eadie

If the hon. Gentleman will allow me, I should like to continue.

When there is a new nuclear generator, there is always trouble to start with. That will be the history of this exercise.

§ Mr. Mans

rose—

§ Mr. Eadie

Perhaps the hon. Gentleman will allow me to finish my point. I have only just started my speech.

I thought it a bit rich of the Secretary of State to rubbish British nuclear technology when we are taking the Westinghouse American type. They decided not to build any more, so it is a bit rich to put that defence.

I am trying to say that the debate has become a general advertisement for nuclear power. Just last week I read that the Government are so confident about nuclear power and thermal nuclear power that they propose to spend £20 million advertising it. It reminds me of the old ditty that I heard as a boy. It went something like this. The codfish lays a million eggs, the hen lays only one, but the codfish doesn't cackle when its little stunt is done. The artful hen we praise, the codfish we despise, but every thinking man will agree it pays to advertise. The right hon. Gentleman proposes to spend £20 million advertising a deficient case.

§ Mr. Sayeed

Will the hon. Gentleman give way?

§