§ Order for Second Reading read.3.46 pm
§ The Minister for Energy and Industry (Mr. Tim Eggar)
I beg to move, That the Bill be now read a Second time.
The Bill will enable the privatisation of the commercial activities of the Atomic Energy Authority known as AEA Technology. It is designed to permit the sale of AEA Technology, but it is not designed to lead to nuclear privatisation. AEA Technology is not a nuclear operator. The Bill will not take any nuclear facilities into the private sector. It will allow AEA Technology to realise its full potential and it will enhance overall United Kingdom competitiveness. It will provide staff with new opportunities and new horizons.
It may help the House if I explain something of the background. AEA Technology is an operating division of the United Kingdom Atomic Energy Authority. The authority started life in the 1950s as a nuclear research and development organisation. In those days, the authority was the UK nuclear industry. It designed and operated the first nuclear power stations in the country. It manufactured and reprocessed fuel. It undertook a wide range of nuclear activities. But it was primarily a research organisation. As the nuclear programme developed, it became the practice to transfer out functions which could be run commercially.
For example, fuel manufacture was transferred out to the company which subsequently became British Nuclear Fuels plc. Radioisotope production was transferred out to what is now Amersham International. Amersham has been successfully privatised. Both it and BNFL have become successful companies in their own right.
In the 1960s, it became clear that nuclear research was producing ideas and technologies which could be applied in non-nuclear fields.
§ Mr. Andrew Miller (Ellesmere Port and Neston)
Before the Minister moves away from the history of some of the changes, will he outline the structural differences between companies such as Amersham International, particularly in the context of employee rights that exist post-privatisation?
§ Mr. Eggar
I shall address some of those issues, particularly pensions, which I think that the hon. Gentleman had in mind. I understand that the overwhelming majority of Amersham International employees have now voluntarily left the state pension scheme and have opted into the company pension scheme. I shall return to that issue and if the hon. Gentleman wishes to intervene again, I shall gladly extend the debate.
In 1965, the authority was authorised to begin work on non-nuclear research and development. From the outset, non-nuclear work was done on a commercial basis. The importance of that work has grown steadily since then.
In the past decade or so, nuclear technology has become a mature technology. New power stations world wide are being ordered at a slower rate, if at all; the pace of work on new reactor designs has slowed. Demand for the authority's traditional nuclear research and development services has declined with the decline in the overall 700 activity of the nuclear generating side. The authority has therefore had to place ever-increasing emphasis on the growing non-nuclear business.
In 1986, an important change occurred. The Atomic Energy Authority Act 1986 put the organisation on to a trading fund basis. From then on it was no longer Vote-funded, but was expected to secure all its income from contracts with customers. Since then the focus has been on how to assure the authority's commercial performance. The Bill now builds on the progress that was made as a result of those changes.
The authority is now smaller than it was in the 1960s, but it remains a substantial organisation, employing more than 7,000 staff at six main UK sites. The largest is at Harwell in Oxfordshire: it has more than 2,300 authority staff. Harwell concentrates mainly on research and development. Culham is nearby in the same county; that site was originally developed for the UK fusion programme, and is host to the joint European Torus project. Fusion still accounts for the work of a significant proportion of the existing work force, but the site is now much more diversified. Last April it became the headquarters of the National Environmental Technology Centre, one of the world's leading centres of environmental expertise. About 900 authority staff work on the Culham site.
Risley is near Warrington. It consists mainly of office and laboratory buildings, and has no nuclear facilities. About 1,000 staff work there. Dounreay, near Thurso in Caithness, was the site for the development of experimental fast reactors. The main task there now is the decommissioning of the site's closed reactors. Dounreay has about 1,000 authority staff. Winfrith in Dorset was the site for several prototype reactors, most of which have now been shut down. About 900 staff work there. Windscale is an enclave within the BNFL site at Sellafield, and has about 400 staff.
Let me say a little more about why we are introducing the Bill. In recent years, a great deal of thought has been given to the question of the authority's future. In 1992, the Monopolies and Mergers Commission reviewed the services that it provided; it concluded that the authority's business activities rested uneasily in the public sector, and should be removed from it as far as practicable.
§ Mr. Llew Smith (Blaenau Gwent)
On a rough count, the word "liability" is used 75 times in the Bill. The biggest Atomic Energy Authority liability relates to nuclear waste and radioactive contamination. Do the Government think it fair to sell off the profitable parts of the authority, on the basis of its high-tech engineering and environmental expertise, while leaving the taxpayer with the bill for cleaning up the nuclear waste left behind?
§ Mr. Eggar
Liability for the treatment of nuclear waste rests, of course, with the Government. The Bill makes no difference to that. Liability rests with Government division of AEA Technology, as I am sure the hon. Gentleman knows. It is the view and the experience of Government Division that an increasing arms length relationship with the various companies—including AEA Technology—that have the necessary expertise to deal with liabilities is the best way forward.
The latest estimate is that, in, I think, the next three years, the move towards an increasing arms length contractual relationship with companies that undertake decommissioning work will lead to a significant saving of 701 public money of about £50 million. Liabilities rest with the Government, but they must do everything possible to ensure that those liabilities are managed not only safely, in accordance with the necessary conditions that are laid down, but cost effectively, from the point of view of doing the utmost to safeguard taxpayers' money.
In 1993, we asked Barclays de Zoete Wedd to consider the scope for privatisation. It advised us that the great majority of AEA's irradiated facilities should remain publicly owned—they should remain in what is now AEA Government division. But it also said that certain commercial activities were capable of being and should be privatised.
In September 1993, the authority's management announced a structural reorganisation, which reflected the themes emerging from the review work. Three separate divisions would result. UKAEA Government division would be responsible for managing UKAEA's sites and its nuclear liabilities. Commercial division, now known as AEA Technology, would take over the authority's commercial activities. The new services division would cover facilities management services.
The authority saw the creation of the services division as a temporary phase. Facilities services did not represent a core part of its business. It believed that those services could be offered more cheaply and efficiently by outside contractors. Agreement has been reached in principle for the sale of facilities services division. The intended buyer—Procord Ltd.—is a leading facilities management company. Its core business is facilities management. Its purchase of FSD will improve quality of service for FSD's customers. It will also create new career opportunities for current employees because they will be part of a much larger organisation that—this is important for their future—is committed to growing the facilities service operation. It is a good deal for all concerned, not least the taxpayer.
In my reply on 17 February 1994 to my hon. Friend the Member for Wantage (Mr. Jackson), I said that ownership of and responsibility for the safe management of AEA's nuclear liabilities, as well as certain other functions more appropriate to Government, would remain in the public sector. I can now confirm that those liabilities and other functions will remain with UKAEA Government division, which will remain in the public sector.
Government division's mission is to manage down the cost of the nuclear liabilities, consistent always with the health, safety and environmental requirements that are laid down. I want to underline and emphasise the importance of safety. Safety is and will remain the highest priority both for the Government and for all those involved in the nuclear industry.
The nuclear site licences at AEA sites will continue to be held by UKAEA Government division. It will, therefore, retain ultimate responsibility for safety at all UKAEA sites. Where AEA Technology operates from those sites, it will have to comply with UKAEA safety requirements. Privatisation will not compromise safety in any way.
Government division's focus on liabilities management has already achieved significant savings. Further savings will flow from increased competition and the injection of private sector expertise.
702 Government division announced yesterday that it has decided to appoint a site managing agent at Dounreay. That managing agency will consist of a management team seconded to Government division. Government division will retain ownership and overall control of the site. Government division will continue to be the site licence holder and will continue, therefore, to have full responsibility for safety.
Dounreay staff currently in Government division will continue to be UKAEA employees. They will not—I repeat not—become the employees of the managing agent. That arrangement will provide additional project management and commercial expertise. It will ensure that decommissioning and environmental restoration work at Dounreay is carried out effectively. It will also help in future development of the site, including the exploitation of non-nuclear opportunities.
§ Mr. Robert Maclennan (Caithness and Sutherland)
This arrangement transfers practical managerial responsibility from managers who have been part of Government division to a firm or group of individuals who are apparently to be employed as a result of outside tendering. Does not that make somewhat fictional this concept of the responsibility for safety remaining with Government division?
§ Mr. Eggar
I understand the hon. Gentleman's concern and the importance of Dounreay to the economy in Thurso and all the far north of Scotland. Obviously, Government division has considered the matter carefully. It will not compromise safety in any way. The division recognises that the nuclear site licence rests with it and that ultimate responsibility for the site and for safety matters must continue to lie with the director of the site, as it does at present. The hon. Gentleman recognises that there is, at present, a need to look at Dounreay's role and, in particular, at the opportunities for other work that might come in as a result of the well-known and understandable rundown—although it is a gradual rundown—in the level of activity there.
Government division has come to the view that it does not currently have the expertise necessary to act as managing agent and, therefore, to look at diversification opportunities. It feels that the best way to obtain that expertise is to appoint a managing agent that will bring with it the necessary mix of skills, but remembering always that the managing agent answers to Government division and the director.
§ Mr. Maclennan
I will not trouble the Minister again, but I hope to come back to some of the points later if I succeed in catching Madam Speaker's eye.
It is important to have the Minister's answer on this point. My question related to the responsibility for safety. The Minister said that that lies with Government division and the director of the site. It appears that that responsibility is effectively being transferred to managers who are being brought in as part of a site management agency team and that the practical work involving safety 703 and the environment, which is crucial to the success of the establishment, is passing away from those who have experience of managing the site safely and in an environmentally non-hazardous way. It is true that, ultimately, the Minister is responsible for safety at the site and I would have thought that he would be unhappy to see such sensitive matters pass from those engaged in the nuclear industry to those whose objectives, even from his own description, are apparently quite different.
§ Mr. Eggar
This is a sensitive matter to which my hon. Friend the Under-Secretary of State for Industry and Energy and I have given considerable thought. Clearly, safety is paramount. It cannot be compromised in ah, way. If Government division were proposing an outside contractor coming in to take over all management responsibility for the site and, therefore, inevitably taking on the safety role, I would understand the hon. Gentleman's concerns and, frankly, I would express them. I am quite satisfied, however, that it will be possible to enable the managing agent to manage the site and bring his company's particular expertise to what is needed to be done, while ensuring that safety standards are maintained. I can tell the hon. Gentleman that if the Government come to the conclusion that that is not happening, we will revert immediately to the holder of the nuclear site licence—Government Division—and satisfy ourselves that the necessary safeguards are in place.
We have looked at the matter in considerable detail because, whatever our political views, we cannot afford to compromise the very high safety standards which have been a feature of the AEA. I would not do anything that in any way imperilled those standards. The system works and I ask the hon. Gentleman to consider it carefully and explore the implications in full detail. I hope that over the coming months before the managing agents are appointed—I understand that it is likely to be around October—he will have found that his concerns have been met.
Let me now turn to describe AEA Technology. AEA Technology is the trading name, as I have said, for the authority's commercial activities. It is an international science and engineering services business, it employs some 4,000 people and has a turnover of £250 million. AEA Technology is represented on all six of the authority's sites, but the largest concentration of staff is at Harwell. Some 1,700 of the total 2,300 employees there work for AEA technology, but, as hon. Members will know, considerable numbers of staff also work at Risley, Culham and Winfrith.
AEA Technology serves a wide range of markets in, for example, manufacturing, transport, oil and gas, defence energy supply, chemicals and health care. It operates in four closely related areas: plant and process performance optimisation, product improvement, safety and risk management and environmental and waste management. Its business, in short, is identifying problems and finding solutions based on the know-how that has been built up over the past 40 years, during which it has been involved in leading-edge science and engineering.
Some 40 per cent. of AEA Technology's business now comes from Government and a further 18 per cent. from the UK public sector. In volume terms, however, the UK domestic Government markets are of diminishing importance.
§ Mr. Ian Bruce (South Dorset)
Does my right hon. Friend intend to say anything about the nuclear review? Many of my constituents are worried that the whole privatisation is a sell-off of the liabilities of the nuclear industry and that the Government may believe that there are no future nuclear requirements. I and many of my hon. Friends believe that there is a great future for the nuclear industry. We would like to hear from the Government that the nuclear review will be published and that the results will be available to us before any sell-off. I hope that Labour Members will tell us what the Labour party will do to assure the future of the nuclear industry.
§ Mr. Eggar
I recognise the concern about the issue felt by my hon. Friend and by his constituents. He raises a number of different strands and I shall address them in turn. His first point relates to liabilities. AEA's liabilities have been calculated to be in the range of £8 billion, on a discounted basis, in a range from £6 billion to £12 billion depending on a number of assumptions. Those liabilities remain with the Government division and, therefore, with the Government.
The question that a number of people are getting at is how the nuclear review, when it is completed, is likely to affect the demand for the nuclear services that AEA Technology can provide. An assumption seems to have developed that if the nuclear review decided that new nuclear stations should be built, that would automatically be good news for AEA Technology. The reality is that almost whatever the decisions of the nuclear review, considerable work is likely to be available to AEA Technology, if it competes effectively for it.
AEA Technology has more expertise than any other entity in the world in the older nuclear stations because the Magnox stations were the first commercial stations in the world. Naturally, the issue of decommissioning and the issues raised towards the end of a station's life have been faced first by the United Kingdom. AEA Technology has undoubtedly developed considerable expertise in those matters. Regardless of whether the nuclear review comes up with a decision to build new nuclear stations or not, there will be a continuing work load. Any decisions taken on the future of the Magnox stations may have a bearing on the work load, although issues relating to the life of the Magnox stations will, of course, be essentially a matter for the nuclear installations inspectorate rather than for the nuclear review.
All that is a rather long way in which to say to my hon. Friend the Member for South Dorset (Mr. Bruce) that at the moment, I cannot tell him when the nuclear review will be published—
§ Mr. Eggar
The hon. Gentleman says that it will be published in the fullness of time. I am much blunter than that. I have made a number of predictions previously on the timing of issues related to the nuclear review and I have never yet been right. This time, I shall not give any idea of the timing of the publication of the nuclear review because that would be tempting fate and my fate is already too near for me to risk any further estimates.
The concern of my hon. Friend the Member for South Dorset is noted. It will take some time for the Bill to go through the House. It is only an enabling measure for 705 privatisation. It is unlikely—I go no further than that—that full privatisation will take place before we have had some idea of the outcome of the nuclear review.
§ Mr. Miller
Before the Minister leaves that issue, does he not think that, given the quite proper overlap between some of the work undertaken by AEA and by Berkeley technology centre, which I know that he has visited, it would be better to hold back the Bill until after the nuclear review, so that we can properly determine, in a rational debate covering the whole spectrum, which issues should fall into which camp?
§ Mr. Eggar
The short answer is no, it would not. But since the House seems to want long answers, I shall expand somewhat on that.
Clearly, if we were talking about a direct relationship between the management of AEA's nuclear liabilities and the nuclear review—which we are not—there would be a case for linkage. But of course the Bill has nothing to do with the liabilities; they are clearly put on one side. The Bill is about AEA's commercial activities, and we must remember that roughly 50 per cent. of all AEAT's present activities are not nuclear related. Everybody agrees that the future of AEA rests with a determination to expand and to compete effectively in the non-nuclear aspects of its activities.
That is nothing new. I pay tribute to the 1965 Labour Government—
§ Mr. Eggar
I am talking about 1965. The Labour Government recognised at that stage that there had to be some diversification away from the core nuclear business into non-nuclear business. That has been a continuing trend, and no serious commentator who knows and is involved with AEAT fails to recognise that its future lies in developing the extraordinary expertise that it has accumulated over the past 40 years and reorienting that to more commercial activities.
One of the more interesting aspects of my connection with AEA over the past two or three years has been the extent to which other United Kingdom companies have not recognised the full extent of its expertise, and the way in which those that have worked with AEAT have been excited by the level of that expertise and the opportunities that have arisen as a result of joint ventures of one kind or another. That is not merely a domestic United Kingdom view; several interesting joint ventures have taken place between Japanese companies and AEAT, and the company has a good reputation throughout the world in the nuclear sphere, too.
That is where the emphasis should lie. However neat and tidy it may seem, it would not be in the interests of AEAT, nor even relevant to the nuclear review, to delay the Bill and wait for the results of that review.
As I said, AEA's growth markets are the United Kingdom private sector and the overseas market, also largely private sector. The United Kingdom private sector already accounts for 18 per cent. of its turnover and overseas markets for 23 per cent. Both those markets are expected to grow this year by no less than 40 per cent., 706 and further substantial growth is expected next year. Privatisation will of course provide further impetus for that process.
§ Mrs. Cheryl Gillan (Chesham and Amersham)
I hope that while my right hon. Friend is talking about the figures, he will say something about AEA's projected profit of £10 million for this year. I understand that the figures for next year look even better. It is important to re-emphasise the great success and the tremendous potential of the organisation.
§ Mr. Eggar
The figures mentioned by my hon. Friend are right, and there is no doubt that AEA Technology has come a long way during the past few years and that it has built on the trading fund status that it was given by the Atomic Energy Authority Act 1986. There is a lot of potential out there for additional work, but the work is highly competitive. There is no area in which AEA Technology has an absolute worldwide monopoly. In most sectors, it has competitors within the UK and elsewhere in the world, and it is very much a worldwide business.
AEA Technology will thrive if it can bring to bear the expertise that it has established from the tremendous residual effect of 40 years of high-class science engineering and apply that in a more rigorous way to the commercial opportunities that exist. I re-emphasise to my hon. Friend that the future lies predominantly in the expansion of non-nuclear, rather than nuclear, business.
§ Mr. Mike Hall (Warrington, South)
Is the Minister aware that the improvements in AEA Technology's profitability in the past 12 months have been borne on the back of 400 redundancies—some 10 per cent. of the work force? Will he assure us that after privatisation—when the terms and conditions of employees in the current company will be divested—the employees will have their incomes, pensions and entitlement to redundancy payments protected, and that they will get more than just the minimum amounts offered with regard to the Transfer of Undertakings (Protection of Employment) Regulations?
§ Mr. Eggar
I shall address those issues later in what is already quite a long speech, if the hon. Gentleman will forgive me. I have been involved in a number of privatisations and I can say as a matter of principle that the Government seek to protect the rights of public sector employees who move to the private sector. We shall certainly do everything we can in terms of TUPE and with regard to pensions, to make sure that a fair and just arrangement is reached. I shall refer at a later stage to those matters, and I shall willingly give way again to the hon. Gentleman if he wishes.
AEA Technology has profited by its experience and expertise in the nuclear field. It has won significant contracts for work at Chernobyl. AEA Technology scientists are currently working on plans for the decommissioning of Chernobyl units 1, 2 and 3. AEA Technology is also a leading member of an international consortium carrying out a feasibility study for a new shelter over unit 4.
Other significant export contracts include a study for the European Commission on the safety of Chernobyl-type RBMK reactors in the former Soviet Union. AEA Technology is also involved in work to clean up the Maralinga test site in Australia.
707 AEA Technology has successfully exploited its nuclear-derived skills in non-nuclear markets. That has involved, for example, the development of non-destructive testing techniques using X-rays and ultrasonics.
AEA Technology developed the original robot used by bomb disposal teams in Northern Ireland. It developed power fluidics, which permits the design of pumps, mixer valves and precipitators without moving parts. That technology has particular advantages in industries such as pharmaceuticals and fine chemicals that involve the production and handling of delicate preparations with minimal damage.
AEA Technology scientists have used their skills in the development of advanced battery technology. Their lithium-ion cathode technology is now being sold to battery manufacturers throughout the world. In health care, AEA Technology has developed a unique three-dimensional laparoscope. That piece of equipment enables a conventional endoscope to give a 3-D picture. It offers major advances for keyhole surgery.
AEA Technology is currently developing a carbon fibre hip implant. It uses filament winding techniques originally used in the aerospace industry. The new implant will be less rigid than currently available metal implants. It will reduce the need for patients to return for second or third operations.
AEA Technology's safety skills have found a significant market in the North sea. Its experts assist operators by producing safety cases for offshore installations. It is a leading safety consultancy in the North sea.
AEA Technology also helped in the search for the causes of the King's Cross fire. Software developed by AEA was used to simulate the spread of fire up the escalator. The model was subsequently validated in scale-model trials at the fire research station. That input helped in the understanding of how the disaster happened. The same technology is now being used to ensure that new underground stations and tunnels are designed to minimise the risk of a similar accident.
AEA Technology's National Environmental Technology Centre was formed last summer by the merger of its environmental operations with those of the Warren Spring laboratory. The centre carries out a vast range of environmental consultancy work. It helps customers meet increasingly demanding environmental standards.
The centre also runs the national air pollution monitoring network for the Department of the Environment, and the National Chemical Emergency Centre, which is on duty 24 hours a day. It helps to sort out chemical accidents throughout the world.
Let me now explain our plans for the future of AEA Technology. In my statement of 17 February 1994, I announced my intention to privatise AEA Technology. I explained that decisions on the form of privatisation would be based on AEA Technology's performance in the marketplace and on the extent to which the various options met customer requirements, enhanced competition, helped to improve UK competitiveness, and maximised the return to the taxpayer.
The chairman of the authority and senior management of AEA Technology have made it clear that, in their view, those criteria would best be satisfied by selling the 708 business as a single whole. Employee representatives have also made it clear that they would wish to see the business kept together as far as possible. I naturally attach a great deal of weight to the views of management and staff. They are the people who know the business and whose commitment is crucial to realising its potential.
The immediate task for management must be to drive forward the commercial development of the business. It must continue the process of focusing the business on its core activities. A good deal has already been achieved in that direction, but there is more to be done. Management recognise that and is committed to the task of carrying it through.
The range of AEA Technology's activities will no doubt continue to change as the business develops.
§ Mr. George Mudie (Leeds, East)
Does the Minister think that there is anything strange in those in the management of a public sector concern wishing to go private, particularly in view of the examples of their predecessors in the public sector getting their noses in the trough in terms of share options and six-figure salaries?
§ Mr. Eggar
I am sorry that, in a sensible, serious debate about the way forward for AEA Technology and how to ensure that that excellent group of people has a prosperous future, the hon. Gentleman should lower the tone in that way. I will not indulge in party political spats of that nature. If the hon. Gentleman wants to lower the tone, that is entirely up to him. In every aspect of its business, AEA Technology is fully competitive. It has competitors in all aspects. Therefore, it has to keep tight control of its costs. It is inevitable that salary costs at all levels in the organisation will be a major factor in its ability to obtain business. What is more, the Government, as vendors of AEA Technology, whether directly or indirectly under the provisions of the Bill, will make sure that the best possible practice is followed and will take account of any Greenbury recommendations, whether or not those recommendations have by that time found their way into legislation, because that has been felt appropriate.
§ Mr. Robert Jackson (Wantage)
I am following with close attention what my right hon. Friend says about the issue of unitary privatisation, because that is probably the critical issue. He talks about the core business of AEA Technology. What is the core business of a research organisation with a great range of customers, with synergies that run across a variety of activities? I warn my right hon. Friend to be very cautious when using the concept of a core business.
§ Mr. Eggar
I see that my hon. Friend disagrees with my assessment of what he said. I think that he fully understands that, because it is a human skills business, because it is a business that will have to pursue the various scientific and engineering opportunities and other consultancy opportunities that are out there, because those opportunities are global and because they vary from time to time and from region to region, it will have to follow 709 the opportunities. The core is likely to change over time, therefore, but I think that it is undoubted and uncontroverted that the management will need to concentrate on specific aspects.
§ Mr. Jackson
I thank my right hon. Friend. I notice that in his answer, which I think was correct except that he made the wrong deduction from my remark, he emphasises the role of the management in deciding what constitutes the core business. I agree with him, and I very much hope that he will give great weight to the opinions of the management in deciding what the structure of the company is to be, whether it will be fragmented and what the core business will be, so that the management will not find itself overruled by the Department, as it might be.
§ Mr. Eggar
We attach a great deal of importance to the attitude of management and, when the time comes for us to decide on privatisation and the structure of privatisation, we shall of course pay attention to the opinions of management. However, as the owner, as the Government protecting the rights of the taxpayers, we must also take account of other considerations.
As I said in response to an intervention, the range of AEA Technology's activities will no doubt continue to change as the business develops.
§ Mr. Eggar
I would not want to say that. At least the hon. Gentleman does not have a copy today of what they wrote.
The range of AEA Technology's activities will no doubt continue to change as the business develops. It is inherent in the nature of a high-tech business such as AEA Technology that over time it should move out of some areas and into new ones, but, consistent with that, the Government agree that AEA Technology should continue to be managed as a single, integrated whole, focused on the goal of building an increasingly competitive and successful international business.
However, final decisions about the form of privatisation must depend on AEA Technology's performance in the months ahead, on the needs and requirements of customers and on confirmation from the market that a unitary sale will secure best overall value for money for the taxpayer. Decisions about the method and timing of the sale can similarly be taken only in the light of market circumstances at the time.
§ Mrs. Gillan
I thank the Minister for giving way. Further to the point made by Opposition Members, as AEA Technology's key resource is its people, does he consider that an element of employee ownership may be particularly appropriate in this case?
§ Mr. Eggar
A fundamental part of the Government's strategy is that when we move towards privatisation, we should seek to involve employees in one way or another. I added that caveat because we have not yet decided how we shall privatise the company—whether it will be by way of a flotation, a trade sale and so on.
710 I do not want to give a firm commitment about employee ownership at this stage. However, I attach a great deal of importance to it and the Government are committed to that strategy. I will be surprised if the final outcome does not involve an element of employee participation in the future success of the privatised entity.
§ Mr. Robert Jackson
I am sorry to trouble my right hon. Friend again, but I am sure that he will appreciate that this is an important matter, which concerns my constituency. He said that the Government want to keep their options open—although I welcome his comments about a single, integrated whole—and that we must review the position in the light of developments. Does he propose to return to the House to gain its approval of the Government's decisions on those points? I do not believe that the Bill makes provision for that and I wonder whether it should be included in the legislation.
§ Mr. Eggar
The Bill is an enabling Bill. It enables the Government to proceed to privatise AEA Technology—although, as I have indicated, not the rest of its activities. Given my hon. Friend's assiduity, I am sure that he will have the opportunity to call us to account using the various avenues that are open to him during the privatisation process.
My hon. Friend is absolutely correct: there is no process within the Bill by which the Government's decisions are automatically the subject of further debate in the House. Following the discussions that we have had over a number of years, I am well aware of my hon. Friend's close interest not just in this matter but in whether the sale should proceed on a unitary basis. The words that I used were chosen very carefully and I think that they will repay careful study by the staff of AEA Technology in his constituency and elsewhere.
Let me say something more about the Bill. It provides scheme-making powers that will facilitate the sale of AEA Technology. It consists, in the main, of standard privatisation provisions, adapted to the specific conditions of AEA Technology.
As I said, the Bill leaves open options as to how the privatisation may take place. It provides for the business to be sold as a whole or in parts. It provides for the sale or sales to be carried out by the authority or by the Secretary of State. It leaves open the possibility of more than one transfer, and for the transfers to be carried out on more than one date.
The Bill specifically excludes the transfer by scheme of freehold land subject to a nuclear site licence. It also excludes the transfer of the nuclear site licence itself. As I emphasised, it is not a nuclear privatisation.
The Bill provides for the financial structure and control of the successor companies after vesting and while they are publicly owned. We shall also bring forward tax provisions in due course. As is customary, they will provide for the tax neutrality of any transfer to successors. We propose to introduce those tax provisions by way of an amendment for consideration in Committee in the House.
Finally on pensions, powers are taken so that all employees transferred to a publicly owned successor company can remain in the authority's schemes until privatisation. The powers also permit us to allow new employees to join the schemes until privatisation. In order to maintain maximum flexibility, there might be a 711 publicly owned successor company and during that time employees would stay with public sector pension provision. In other words, the terms will be exactly the same as they are now.
When privatisation takes place, the Bill will place a statutory duty on the seller—us or the publicly owned company—to be satisfied that employees can join a pension scheme that is no less favourable than the authority's schemes. That means that the new scheme must offer benefits which are at least equivalent to the authority's schemes, although the mix of benefits may be different.
The duty reflects the Government's long-standing practice when public sector employees are transferred to the private sector, but we have set it out expressly in the Bill so that employees know exactly where they stand.
§ Mr. Miller
If the Minister is prepared to give that guarantee, why is he not prepared to give the same guarantees that were given to Amersham International at the time of its flotation? Would it not be more sensible in the interests of the employees and the employer to follow that course of action?
§ Mr. Eggar
The privatisation of Amersham International was 13 or 14 years ago. At the time, employees were offered the choice of staying in the existing scheme or joining a new scheme. I understand that since then, the vast majority of Amersham employees have opted for the new scheme. That shows that it is possible for the private sector to offer more than equivalent pension entitlements and pension schemes to those in the public sector. So that there is no misunderstanding, the rights that have been accumulated in the AEA public sector scheme will remain in place if the employees so wish.
On the question whether the new scheme that is provided by the purchaser is at least equivalent to the authority's schemes, that will be audited by the Government Actuary. In other words, we shall have the advice of the Government Actuary as to whether that undertaking is made. That assurance is coupled with the experience of privatisations over the past 10 or 12 years, when there have always been scare stories about pension entitlements, but when the final settlement has been recognised by all parties to be fair to the employees and to the contributors to the schemes. That seems to me to be the appropriate way forward.
§ Mr. Miller
I am grateful to the Minister, but will he answer the question? If the Government believe in choice, why does he not give these particular employees the choice in these circumstances? Is there a single technical reason that he is hiding away from the House for denying those employees that particular choice?
§ Mr. Eggar
The way in which all privatisation pension issues have been tackled since the Amersham precedent is that new schemes have been provided for the employees who have left the public sector. The Government, having considered all the options, believe that that is the best way forward, subject to the absolute assurance that the new 712 scheme must offer benefits that are at least equivalent to the existing authority's schemes, although the mix of those benefits may be different.
Employees are AEA Technology's greatest asset. Without the skills of its employees, AEA would be nothing. We have no intention of selling employees short, and I am sure that the House will welcome the statutory reassurance that we are proposing.
Privatisation has been one of the Government's greatest success stories because it encourages efficiency and improves competitiveness. Companies flourish when they are removed from state control. They perform better and they respond better to customers.
We believe that privatisation is the only way to enable AEA Technology to realise the full potential of its scientific and engineering activities. There are enormous opportunities in the market. A fully competitive AEA Technology would be well placed to exploit those issues to the benefit of its staff and the United Kingdom. The Bill provides the key to unlocking that potential and I commend it to the House.
§ Dr. Lewis Moonie (Kirkcaldy)
In a long and at times interesting speech, the Minister has tried to persuade us to give the Bill a Second Reading. In our opinion, if the Bill ever reaches the Statute Book it could do great harm to one of the few enterprises of which the Department of Trade and Industry can still be proud. I therefore regret to inform the Minister that my right hon. and hon. Friends and I intend to vote against the Bill today, for the many reasons that I shall outline later in my speech.
The Bill is not the privatisation measure that the President of the Board of Trade really meant to bring before the House during this parliamentary Session. As was mentioned yesterday, that was meant to be the fate of the Post Office, but alas, he and the Minister have been unable to convince sufficient numbers of their colleagues of the sterling merits of that proposal—in other words, to persuade them to vote for political suicide—hence the inclusion of the present measure in the Queen's speech last November. How unfortunate for the President of the Board of Trade to be treated so badly by his party in the autumn of a distinguished career—
§ Dr. Moonie
No, winter implies that there is a spring.
I am more than a little surprised to see the President of the Board of Trade and the Minister of State still in their places after the debacle attendant on the sale of the electricity generating companies last week. So far, with indifferent success, they have managed to dodge the charge of double dealing levelled at them by my hon. Friends and outraged investors in the city. I fear, however, that they may have seen their last donation from Trafalgar House. They will find it rather more difficult to avoid the only alternative explanation, which is that they are grossly incompetent. Sadly, incompetence has never been grounds for dismissal or resignation in the Tory party. If it were, I suspect that the Conservative Benches would be even more sparsely occupied than they are today.
The Bill is unnecessary and ill timed and may well operate against the national interest. It will certainly be a great source of concern to many of the 4,000 employees of AEA Technology, whose jobs, pensions and terms and 713 conditions of employment will be affected to their detriment. As the Minister has told us, the Bill is a paving measure allowing AEA management to set up a company or companies which can be sold off without further effective parliamentary scrutiny. In other words, Ministers are asking to us write them a blank cheque—so much for open Government.
Besides that point of principle, which alone would be reason enough to vote against Second Reading tonight, I have listed four areas of general concern in the Bill which Ministers would do well to heed as they epitomise the failure of Government over the past 15 years.
First, we believe that the Bill is ill timed. We are currently awaiting publication of the long overdue nuclear review. In addition to making proposals about present and future power generation, the review will be obliged to look at other elements in the nuclear equation such as BNFL, the future of the Government division of AEA, practical problems concerning decommissioning, storage and processing of nuclear waste, and the future of Dounreay which is of great concern to the hon. Member for Caithness and Sutherland (Mr. Maclennan).
Many of the arguments advanced by the Minister on behalf of the sell-off could apply equally to any of those agencies and services, in some cases with greater justification. For example, BNFL has secured world-wide markets for its services, including the thermal oxide reprocessing plant.
I am sure that the Minister has noted an article in The Independent on Sunday this weekend under the heading, "Nuclear sell-off planned". It says:Plans for an urgent, whole-scale privatisation of Britain's nuclear industry are being drawn up in secret by the Treasury.I presume that that is why the Minister knows nothing about them.They could lead to an attempt to sell off the controversial Thorp reprocessing plant.The plans, which would also transfer Britain's oldest and most dangerous nuclear power station to British Nuclear Fuels, are causing a row between Chancellor Kenneth Clarke and…the President of the Board of Trade, who argues that they will lose votes at the next general election.Mr. Clarke wants to announce the sell-off before the Easter recess and is keen to realise the money to finance tax cuts.
AEA Technology forms part of a seamless organisation, which is why we feel that the Government would be well advised to wait until they see the outcome of their nuclear review before proceeding further. Many of the skills that have been placed in AEA Technology rather than the Government division by the present set-up are acutely relevant to the current and future well-being of nuclear technology. I quote from the recent publications list, which includesThe Jet neutron emission profile monitor; Application and development of ion chromatography for the analysis of transition metal cations in the primary coolants of light water reactors"—I understand what those are, even if nobody else except my right hon. Friend the Member for Copeland (Dr. Cunningham) does—An efficient 14-M-V neutron detector for use in mixed 2.5- and I4-MeV neutron beams".714 Need I go on?
§ Dr. Moonie
I certainly can. I will continue:A guide to the measurement of environmental gamma radiation; Operational trials of single- and multi-element CR-39 dosemeters for the DIDO and PLUTO reactors at the Harwell Laboratory".The list is endless, and shows that AEA Technology is involved in nuclear research. To attempt at this stage, before we have the slightest sniff of what the nuclear review will include, is plain daft.
The division of AEA into so-called "nuclear and non-nuclear agencies" may have the merit of simplicity—always a key point for Ministers—but it lacks any valid justification. The suggestion that the Government division should be restricted eventually to a glorified purchasing agency for largely private decommissioning companies is justifiable only to a Government who have no intention of allowing it to operate profitably in the public sector even though it, too, could easily be a highly succesful operation. The Government division's decommissioning liabilities are the responsibility of the Government, who must provide the necessary resources for an effective programme, but at least some of the costs could be offset by allowing AEA to remain a joint agency covering both nuclear and non-nuclear work, selling its services on a world market which is increasingly desperate for quality of the kind that we can best provide. Why change things now, before those issues have been given proper consideration? It makes no sense.
§ Mr. Maclennan
The hon. Gentleman rightly described the Government's view as daft, but is it not worse than that? As the Minister has said that the Government have no intention of privatising the nuclear industry and that that is not what the Bill does, in the event of an attempt in the future to privatise the sort of activities that the hon. Gentleman has described it could be argued that what the Minister has said today would render that intention ultra vires. Moreover, he has made it even more difficult to carry out his stated purpose.
§ Dr. Moonie
The hon. Gentleman makes a valid point and I hope that the Under-Secretary of State will return to it when he sums up—given the number of hon. Members present, it will be an extensive summing up—the debate. There are a few things in the world worse than being daft. As a former psychiatrist, I can testify to that from my observation of the Government Benches over the past eight years.
In passing, I should mention a further problem. The facilities management division of AEA, as the Minister has described—the part responsible for providing infrastructure support and general services to all AEA's sites—is currently being flogged off to the highest bidder, despite the pleas of the work force and the Opposition to delay the decision until AEA's future is decided. I understand—the Minister confirmed it today—that the contract is to be awarded to a company called Procord, formerly part of IBM, which was run by the present chairman of AEA, Sir Anthony Cleaver, before taking up his present appointment. The Minister should be well aware of how unwholesome such a position might appear 715 to an impartial observer. However, the Under-Secretary of State may be able to set our minds at rest on that matter when he sums up the debate.
§ Mr. Eggar
Perhaps I may deal with the matter now, as it is unfair to the current chairman of AEA to allow such a slur to rest, even for a few hours. The current chairman was aware that such a construction could be placed on the matter by Opposition Members. He therefore took no part in the board meeting at which it was decided to allocate the contract to Procord.
§ Dr. Moonie
I am happy to have that reassurance from the Minister. However, there is a big difference between making slurs and accusations, which I was careful not to do, and raising proper concerns about how Government business is conducted, which is our job even if the right hon. Gentleman does not consider it to be his.
Our second reason for opposing the Bill is that we believe that privatisation is unnecessary. AEA Technology has been operating more than satisfactorily in the public sector as a trading fund for some years. It has been operating successfully, growing and diversifying, and it does not need to be sold off to make a go of things as it is already doing perfectly well in public hands. Unlike Amersham International, which was sold off 12 years ago and had a specialised range of products—a niche market for isotopes—AEA technology provides a wide range of specialist research and technological facilities and expertise. Its value lies entirely in the brains and skills of its employees. Such services might equally well be said to form a legitimate part of the work of a Department of Trade and Industry which took its job seriously.
AEA Technology requires working capital to continue its ambitious programme of expansion. Once again, there is no reason why that could not be sought from banks or investors in the City. The Minister will say that Treasury rules must apply. Why? Why should one Government Department be able to veto such a move? No legal requirement allows it to dictate the pace of expansion of a successful organisation in the public sector. One has only to consider the history of BNFL, before the rules were so conveniently changed a few months ago, the record of the British National Oil Corporation in public hands, or the history of BP following the takeover of Burma Oil in 1974, when the Government had a 70 per cent. stake in that company. None of those companies had any problem operating as plcs within the public sector, and I recall no complaints.
Purely because of the spite of Ministers following their failure over the Post Office, no company can be allowed to operate as a commercial success in public hands. AEA Technology must be sold off and BNFL must come under Treasury rules, purely to ensure that the President of the Board of Trade has an excuse, no matter how pathetic, for saying that nothing can be done for the Post Office either. The rule is that if you are successful you must be sold: there is no alternative—but at least the Department itself is safe enough on the basis of that criterion.
AEA should be allowed to trade commercially as a publicly owned company outside the public sector borrowing requirement. Its profits should be used both to fund future expansion and to defray the cost to the public purse of decommissioning old nuclear facilities and 716 Government reactors. There is no need for a sell-off. AEA is successful and can continue to grow and prosper under public ownership.
The third reason for our opposition to the Bill is our belief that the sale of AEA Technology is not in the national interest. For example, there could be serious consequences for our national research effort. At a stroke, an agency which is the equivalent of the engineering, science and technological faculties of any half dozen of our largest universities will pass out of the Department's hands and we shall lose control of the strategic direction of a highly valuable national asset.
We believe that the vast store of expertise in AEA should be directed towards carrying out work on behalf of the Government. We know that much of the value of AEA to major companies lies in the objectivity that a Government agency brings with it—an objectivity which could no longer be guaranteed if AEA belonged to one of a company's rivals operating in the same area. To get the greatest benefit from AEA technology, we must ensure its independence.
We shall shortly see the first fruits of technology foresight, as the first round of results nears publication. Recommendations as to fruitful areas of investment in 16 distinct technology areas will be made, many of which are currently being studied by AEA. What a golden opportunity for the Department of Trade and Industry to get involved in preparatory research, prior to floating worthwhile projects on the market. Even the Government have admitted that they were rash to withdraw from near-market research in the 1980s.
Here is a chance to put that right, but will the Government take it? I very much doubt it. The Department has cut its support for industry in every year that the Conservative Government have been in office. The Secretary of State abandoned its advanced technology programme on the very day the Science White Paper was published in 1993 by the Office of Science and Technology. I suspect that, once again, we shall see the DTI ducking its responsibilities, behind a glossy smokescreen which promises much and delivers nothing.
§ Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)
Will the hon. Gentleman explain how a company which belongs to the Government and the assets of which are held by the Treasury can possibly operate outside the PSBR rules? Either it belongs to the Government or it does not.
§ Dr. Moonie
BNFL has done just that for the 15 years the Conservative Government have been in existence. It is only in the past few months that the rules have been changed, so I do not need to give any explanation. It is a perfectly legal and normal thing to do. It is a matter of choice whether the Government do it or not. It is not a matter of obligation.
In the past year, we have had a White Paper on competitiveness from the DTI which has been so successful that, without anything having been done about that one, the Department is to publish a second White Paper on competitiveness this summer. Perhaps that one will meet with more success than the former.
§ Mr. Ian Bruce
Many of my constituents will be listening to the debate and will want to hear, because they know that nuclear research and nuclear building takes decades—and one never knows, even in the next two or 717 three decades, the Labour party may yet get back into Government—what the Labour party's commitment is to the nuclear industry. May we have that clearly on the record, because that is much more important to many of my constituents, who believe that it will be sooner rather than later that the Labour party gets in, and therefore whether they will have a job in the future.
§ Dr. Moonie
It will certainly be sooner rather than later. I can give the hon. Gentleman an assurance that we shall keep the nuclear industry in the public sector. More than that I cannot say at the present time. I will, however, wait for the publication of the nuclear review—whenever it comes—with great interest, to see what the Government's plans are for the industry and how well they are received.
§ Mr. Bruce
We have these exchanges across the Floor, but in past Labour party policy documents there was in effect a commitment never to build another nuclear power station, to seek to remove those currently in existence, particularly Magnox, to bring in more coal-fired power stations, and so on. Is there now a change of policy in the Labour party? Will the new Labour party build new nuclear power stations?
§ Dr. Moonie
The hon. Gentleman has given a garbled and confused description of Labour party policy.
§ Dr. Moonie
The Minister of State may wish that it was perfectly clear, but I assure him that it was not. I do not intend to waste the time of the House discussing putative issues such as that. One thing, however, that the Labour party does see clearly is the need for strategic direction in the provision of long-term energy needs—something that is sadly lacking in the present Government's strategy.
§ Dr. Moonie
I shall be happy to give the right hon. Gentleman a lesson in strategic planning any time he wishes, but I certainly do not intend to spend any further time on the side road, as I do not know the answer. If I may, I will return to the matter before us.
Hon. Members may think that the situation that I have described is bad enough, but I am afraid that there is worse to come. Last year, AEA absorbed Warren Spring, the Government's own environmental science research laboratory. We were told that their roles were complementary—another excuse for a budget cut, of course. If this privatisation is allowed to proceed, Warren Spring, a next steps agency, will in effect have been privatised with no parliamentary scrutiny of the procedure whatever.
AEA is also rumoured to have been the successful bidder, as part of a consortium, for the national physical laboratory, which is responsible for setting standards of physical measurement for the nation and is an institution that is respected world-wide. Do Ministers really believe that such a function should be sold off into private hands 718 and that any private company should be entrusted with such a national responsibility? Can the Government not see that there are some things that they must do for themselves? Their policy is stupid and short-sighted and they should think again.
My fourth concern is about the fate of AEA Technology's 4,000 employees. Trade unions representing staff have been vociferous in their criticism of the Government's plans—with justification, when one considers the fate of skilled work forces under all previous sell-offs. As I have already mentioned, AEA has some of the most highly skilled staff of any organisation and its concern for the future is about its employees' jobs, their terms and conditions and their pension rights following the sale of their company. I believe that those legitimate anxieties are fully justified, given the reluctance with which the present Government have applied even the limited protection afforded by the Transfer of Undertakings (Protection of Employment) Regulations.
I know that some steps have been taken to allay fears about pensions, through the introduction of schedule 3, which we shall debate in detail in Committee. I do not intend to go into it in great detail today. The promise of a pension scheme equivalent to that which employees currently have must be backed up in Committee by rather stronger commitments than exist at present before they are acceptable to the work force or to Opposition Members.
On terms and conditions of service, there will be no such guarantees, and there is a strong likelihood of redundancies, as AEA tries to fatten its balance sheet in preparation for privatisation. Activities which are considered to be marginal or of little short-term commercial relevance will be ruthlessly pruned away, and the work force will go with it. The concerns of the trade unions go even further. The Institution of Professionals, Managers and Specialists, in a memorandum submitted to the House of Commons Select Committee on Science and Technology, commented on the commercial viability of AEA, saying thatthere is a risk of early business failure for the privatised part of AEA, which would cause extra cost and difficulty for the Government. This is because increasing profit projections for Commercial Division rely on exploitation of monopoly situations that currently exist, for example, in the areas of decommissioning and waste management. Without the guarantee of long term Government contracts after flotation, the future of the Division would be at risk. In addition many of the potentially commercial activities assigned to Commercial Division risk failure since they are based on synergies with part of Government Division that would no longer be available to them. They would be unable on their own to demonstrate profitability at a sufficient level in the early stages and, under private sector criteria, would be closed down. Even if it does survive the privatised commercial division is likely to have to change its character.That is clear enough. I should have thought that the previous experience of the President of the Board of Trade, when he was Secretary of State for Defence, might have induced a little more caution. Perhaps he has forgotten the fate of Defence Technology Enterprise, set up by himself to exploit defence technology in the civil field. Now, alas, it is no more: it closed down as a result of commercial failure of the kind that I have been describing. There is thus a justified trade union fear for AEA Technology.
I shall now deal with some detailed criticisms of the Bill which reinforce our decision to oppose Second Reading. It is clear that Ministers have absolutely no idea what form the sale of AEA Technology will ultimately 719 take. They just do not know how to do it, only that they must continue with their dogmatic opposition to anything that is good remaining in the public sector. Quite apart from the division of the AEA's business into nuclear and non-nuclear, however specious that may be, a separation which is neither as easy nor as advisable as the Government would have us believe, they do not know when it will be sold, in what manner it will be sold, what size of packages will be involved or who will purchase it.
An editorial in the Financial Times suggests that the ideal solution must be a management buy-out which would create a sense of partnership among the companies' employees and guarantee the AEA the independence to underpin its credibility as a consultancy. The alternative would be flotation as a private company. However, that would not be easy as investors would have to be sure that the company had a worthwhile portfolio of contracts and that its principal assets—people—would not walk out of the door. Only as a last resort should the Government consider the remaining option—sale, in whole or in part, to trade purchasers. That would be highly unsatisfactory. The AEA would lose its independence and, if broken up, its range of skills as well. The Government must make it clear early in the Committee stage exactly what their intentions are. We certainly intend to press them further on that important matter.
So far as I can see—I may have missed it—there is no provision in the Bill for the retention of a golden share in AEA Technology, which I hope that the Government will consider as they have done in other enterprises that they have tried to sell off. If they do retain a golden share, what will it be worth? Previous golden shares have been only a temporary respite for the companies involved. In view of the strategic nature of much of the research involved, will the Government ensure that no foreign buyer will be able to take over the company? After all, where research covers sensitive areas, that is a right even under present EC competition rules. Will the Government give that guarantee to the company if it is to be sold into the private sector? They must answer that question before the Bill proceeds much further.
Clause 3 empowers management to take any action that it sees fit to facilitate privatisation. What on earth does that mean? Does it mean larger salaries, share options, better cars, 1,000 redundancies? Some amplification is surely desirable. One thing of which we can be sure is that the work force will see little benefit from such provision as management fatten up this particular calf for privatisation.
Clause 10 removes an important qualification from the members of the board of the AEA. The Atomic Energy Authority Act 1954 stipulated that board members should include people with three particular skills. Clause 1(3) says:All the members of the Authority shall be appointed by the Lord President of the Council and of those members—(a) three shall be appointed from amongst persons appearing to the Lord President of the Council tobe persons who have had wide experience of, and shown capacity in dealing with, problems associated with atomic energy; and(b) one shall be appointed from amongst persons appearing to the Lord President of the Council tohave had wide experience of, and shown capacity in, administration and finance; and(c) one shall be appointed from amongst persons appearing to the Lord President of the Council to have had wide experience of, and shown capacity in, the organisation of workers.720 Those requirements are all being removed from members of the board of AEA which, in addition, is being reduced in size. I can see the advertisements now: "Join the board of AEA; fat salary available to the right man"—they will be men, of course—"No prior experience necessary; only former Tory Ministers need apply".
The real tragedy of the measure is not the fact that it is being brought before us today, but that there are so many other more worthwhile things that the Department of Trade and Industry could and should be doing instead of wasting our time with such a dubious measure. For instance, we could have had the Bill that everyone but the Government agrees that the Post Office requires to become more competitive in an increasingly complex trading environment while remaining where it belongs—in the public sector, as everyone wants. As I have already pointed out, we could have developed detailed plans to take full advantage of the technology foresight exercise—I bet that the Japanese have.
Ministers might care to look at enacting a proper framework of legislation for competition in Britain to raise our standards to those of our competitors in the United States and the EC. They might even take the logic of the nuclear review a stage further and hold the full-scale strategic inquiry into our long-term energy needs that we believe is necessary. But no—instead, the Government bring this stupid measure before us: a Bill that will damage one of the few institutions of which the Department of Trade and Industry can be proud. What an indictment that is of the sorry bunch masquerading as a Government on the Conservative Benches.
§ Mr. Ian Bruce (South Dorset)
It is always a pleasure to listen to the hon. Member for Kirkcaldy (Dr. Moonie). I am a great fan of Scottish accents, and his is wonderfully pleasant.
Unfortunately, I had much difficulty discerning what the Labour party is about. Most hon. Members who are present this afternoon are here for the good reason that they have constituency interests, particularly affecting the employment of their constituents. I should have liked to hear from the hon. Gentleman—who believes, I am sure wrongly, that the Labour party will be in government in two years' time—that the Opposition's strategic planning had extended to deciding whether there should be a nuclear industry. I should be grateful to hear what Opposition Members think about the British nuclear industry.
§ Mr. Miller
Can the hon. Gentleman tell us what the Minister was unable to tell us—what will be in the nuclear review?
§ Mr. Bruce
I should be happy to be able to announce today what will be in the nuclear review. I am pleased to be able to tell the hon. Gentleman, and I am sure that he will be pleased to hear it, that the British nuclear industry is rapidly renationalising electricity supply. I say that because the proportion of electricity being generated by the nationalised industries rather than the privatised industries is going up by leaps and bounds.
One of the problems about privatising the nuclear industry is not that it will not make a profit or succeed, but that it is now so large that it could not be privatised in 721 one lump. It represents too large a proportion of electricity supply and generation and so would have an advantage over conventional power stations.
Like the hon. Member for Kirkcaldy, I await with bated breath the results of the nuclear review, but I am confident about its outcome because the Government are fully committed to the nuclear industry and to diversity of supply, which has been so valuable for our country, particularly when we were being held to ransom by some hon. Members who support the Labour party.
Knowing that in recent years the nuclear industry has had to contract its research because of the paucity of new orders for new types of nuclear power station and the lack of any assured continuity of the pressurised water reactor stations, my constituents, who have one of the smaller nuclear sites at Winfrith, are concerned that it might be allowed to wither on the vine.
We had a steam-generating heavy water reactor, which was produced as a demonstrator when the right hon. Member for Chesterfield (Mr. Benn) was Secretary of State for Energy. He is a charming and well-respected Member of the House, but he is not well-liked in the nuclear industry in my constituency because it was he who decided to scrap that excellent design in favour of the advanced gas-cooled reactor. It will be a long time before we can fully establish whether the AGR was a success, but my constituents felt that the SGHWR was the right way to go. While it was producing 100 MW for the grid, it was successful, but it has come to the end of its useful life and is being decommissioned. That has meant a reduction in production workers in my constituency. The research side of AEA Technology has been reduced and that too has meant a loss of employment.
My constituents, however, are always thinking in terms of enterprise and continuity of employment. Rather than simply allowing the site to become less and less occupied, they have already persuaded the Defence Research Agency to consolidate most of its operations in Dorset and beyond, to come on to the site and to take up redundant buildings, as well as constructing new ones. AEA Technology must be congratulated on perceiving that as a forward-looking way of dealing with the difficulties of reduced employment. Several other companies also intend to come on to the site, and the opportunities that that will provide for further employment are important to those who currently work for AEA Technology, and to all the divisions.
The nuclear industry has spawned a number of interesting new technologies. The site at Winfrith, for instance, is very good at oil well logging—deciding how much oil is in a well. I was disappointed that, when the Government decided to move part of the Department of Trade and Industry out of London, they opted for Aberdeen rather than Winfrith. A move to Winfrith would have been much more sensible, because much of the technical work that is done for the DTI—enabling decisions to be made about how an oil company can best exploit a well—is done there. I am sorry that my right hon. and hon. Friends were short-sighted in that regard, not least because of the relative distances involved.
I see smiles on the faces of DTI officials—who are now hiding behind the Box—at the wonderful thought of working in Dorset, which is rather nearer to London than Aberdeen. Aberdeen is a wonderful place, of course, but 722 it has already received a good deal of investment; the Government are already committed to Scotland, Wales and the more distant regions, and should be encouraged to help the south and south-west.
Safety cases have always been a feature of nuclear technology. Everyone has always assumed that nuclear is more dangerous than anything else, which is not true. The safety cases for the nuclear industry, however, have an enormous cross-over benefit: we now realise that oilfield and transport technologies, for instance, need the same detailed provision. AEA Technology should be congratulated on having developed that outside the nuclear industry.
I hope that one of the spin-offs of AEA Technology's privatisation will be an opportunity for it to extend its activities into non-nuclear fields, but the Government must not expect it to lose its nuclear expertise. I am certain that they will require it to be "switched on" for nuclear purposes in future, both in the United Kingdom and—perhaps even more important—overseas. I shall deal with the reorganisation issue shortly: I share the concern expressed by a number of hon. Members about the splitting of AEA Technology, and the possible reduction of its ability to compete in important respects.
We often lose sight of technology transfer. The hon. Member for Kirkcaldy suggested that it had not worked particularly well for defence, but I believe that technology transfer in AEA Technology has been constantly held back by the fact that the organisation is Government-owned. Treasury rules have limited what it can profitably or sensibly do: for instance, it is currently not supposed to compete with other private organisations. That has nearly always meant that, when AEA Technology has developed a good idea, it has had to license it to another company rather than pursue it for itself. When it has been unable to find a private sector partner, despite believing that its idea has great potential, it has been unable to back its own judgment.
There is clearly a limited market for pure research. When AEA Technology can develop that research, manufacture products and provide services without having to worry about whether its activities are in the public interest or would be approved of by Government, it will be much better off. Employment will also benefit. Of course that is a risky strategy, because such activities can fail; but we cannot simply allow the nuclear research organisations to wait for the Government to come forward with research projects. We know that the Government and the generating industries are likely to spend less on research unless more nuclear power stations are built, or decommissioning is speeded up. We must give those organisations freedom to go out and compete.
§ Dr. Moonie
Does the hon. Gentleman agree that research-based organisations are not always good at production? There is a logical distinction between the two. Moreover, spending on research and development is highly elastic, especially in view of the business cycle. There is a considerable risk that, if the AEA is entirely dependent on the market, when there is a downturn—as always happens, with or without Government policy—it will suffer as a consequence.
§ Mr. Bruce
I have acknowledged the risks of moving into other areas of production. I was interested to note what the hon. Gentleman said about cutting off, as it were, some of the AEA's current arms by decommissioning. It 723 will, of course, suffer as a result of that. But if a management is looking for opportunities and taking a conservative—with a small "c"—view of the future, high technology and technology transfer should be at the forefront of its mind. It should consider how to transfer its technology into production; after all, that is what the United Kingdom will live on in the future. How that is done must be up to management. I agree with the hon. Member for Kirkcaldy that it is important to use those with good production skills, but management must have the freedom to make commercial deals that are in the best interests of AEA Technology and, ultimately, the creation of jobs and UK Ltd.
I hope that I have explained why I think that privatisation is the right course. Let me deal next with the genuine concerns of many of my constituents, which have already featured in the debate and will no doubt be mentioned again. I trust that I have made it plain that my constituents are not Luddites; they are not in the business of saying no for the sake of it. I therefore feel that the Government should listen to them carefully.
The Bill gives some reassurance about pensions. With previous privatisations, Opposition Members have often complained that the Bills involved contained no provision to help with pensions. We must ensure that people feel that their pensions are being properly looked after and that their future well-being is at the forefront of the Government's transfer plans.
Redundancies are also a real worry. Many of my constituents are saying, "I have many skills. The Government and AEA Technology may want to make me redundant; there have been some generous redundancy schemes in the past. Yes please, I will grab the redundancy and then take my place in the job market." As a constituency Member of Parliament, I do not want those people to take redundancy at this stage. I believe that AEA Technology has a great future, but we must reassure people.
In three, four or five years' time, AEA Technology may well be owned by a large multinational company. If people believed that the new employer could give them the minimum statutory redundancy pay and then push them out into the marketplace, they would feel that the Government had betrayed them. In recent years, the Government have rightly looked after employees who have been made redundant. The Government have an excellent record on privatisation and on helping people to move from Government to private sector employment, but I cannot emphasise strongly enough that all constituency Members of Parliament will be keen to ensure that the Government maintain their high standards. I shall certainly be at the forefront of doing so on behalf of my constituents.
I know that Ministers will say that, of course, management knows what is right, that it has a wonderful system of reorganisation and that they will back its ability to make the right decisions. My constituents, however, lack confidence in what management is saying. There is some justification for that feeling because management has reorganised AEA Technology almost annually, perhaps even bi-annually, which has sapped people's morale.
Clearly, we are approaching the point at which the Government will say, "This is the right reorganisation, the management has got it right, we will enshrine it by keeping a Government division, selling off the services 724 and putting AEA Technology's operation and research arms into the private sector." We must be careful to ensure, however, that management has got it right, and even more careful that no evidence exists that the management's suggestion on the way forward has been overruled by Department of Trade and Industry officials, who recommend it to Ministers, who then rubber stamp what they think is the management's decision, but is actually the management decision as modified by the DTI.
It has been suggested to me on a number of occasions that management has agreed a trade-off with the DTI, which has said, "If you get rid of this, we will not hammer you on something else." I do not want to go into detail and embarrass individuals. One must appreciate that, effectively, the organisation's management is now made up of civil servants, who cannot talk publicly about what they want. Ministers should consider carefully what is being said to them and try to get the best deal for the future of AEA Technology.
I have nailed my colours to the mast, unlike the Labour party, which is not in favour of privatisation. Privatisation will he good, but we must ensure that we get it right and that employees are given an assurance that it is not some form of redundancy scheme, with the Government, as an easy way of getting rid of the research side and 4,000 employees, shoving them off into a company. If it failed, no embarrassment would be caused by a Minister having to say what the problem was at the Dispatch Box. That will not happen, but Ministers need to ensure that they are certain that the proposal will have a good chance of flying.
I notice the removal of large amounts of debts and liabilities from all wings of AEA Technology. The Government are doing their best to ensure that they leave a company that has low-cost assets and that could really do something in the market. That is important.
One specific matter confused many of us who were enthusiastic about AEA Technology going into the private sector. Decommissioning work is undertaken in what was known in my constituency as building A59. Such decommissioning is undertaken at a number of AEA Technology sites. The Government division did not need to undertake that decommissioning work—it could have been done in the private sector and was originally left with AEA Technology. I did not disagree with that. Then a deal was struck at the DTI, and decommissioning was promptly transferred from AEA Technology and back to the Government division, so that the Government division could sell it off to another company. I was not totally convinced that that was wrong, but I was concerned about what happened.
The Government and, I think, the DTI said that decommissioning could be undertaken by a number of different companies and that a competitive market should exist for decommissioning companies. I do not disagree with that. But why should not AEA Technology have a decommissioning arm? It knows about the subject. It has a research base and management for that. From day one. management would have been able to bid for decommissioning work in the marketplace. It was not necessary to sell it off to another company, which would 725 then have that facility and which would be able to bid against other private sector companies going for decommissioning work.
§ Mr. Ken Purchase (Wolverhampton, North-East)
Given his diligence as a constituency Member, in the past few months the hon. Gentleman will have made a number of inquiries about those matters. Does not he think that hon. Members will find it extraordinary that he now says that they cause him great puzzlement? Should not they have been sorted out to his satisfaction? He would then not have needed to express his worries to the House. Does that leave the rest of us with any confidence in the Bill?
§ Mr. Bruce
I am grateful to the hon. Gentleman for looking after my interests. As I am sure he appreciates as a constituency Member with detailed knowledge of the matter, I have pursued my interests both with Ministers and with different members of the management. [Interruption.] He should listen to my answer. I have explored this matter with a number of members of the senior management in AEA Technology. The answers that I received were not uniform. Some members of the management team, who I greatly respect, believe that this move is in the best interests of all the employees. That, after all, is what the DTI appears to be saying. Other members of the team are troubled by it. I know it is a big troubling factor for employees. They see a sub-plot that has not been fully explained to them. We must move carefully.
My understanding is that the work has already been sent out to companies that might want to take it over. Ministers should ensure that a bid by a new company to undertake the work will be put to the test. We should know whether employees will be better off from that move and what the continuity of the work will be. After all, decommissioning on the Winfrith site will end within the next two years, at which point employees expect to be made redundant. What proposal provides a better chance of them having work, and what are the chances of them having the same redundancy deal that they would have received from the Government? Those are important factors.
If my hon. Friend the Under-Secretary is not satisfied with hiving off decommissioning work, he should talk to AEA Technology about the possibility of taking it back under its wing and continuing, as part of the privatisation, to keep it together. I rely on my hon. Friend. I notice that he is taking detailed notes of this, as, I am sure, are his officials. I hope that they will consider the matter in great detail. As the hon. Member for Wolverhampton, North-East (Mr. Purchase) suggested, I have unfinished business. I shall keep a close eye on it.
Before AEA Technology is privatised, it is important to have the nuclear review. I heard my right hon. Friend the Minister for Energy and Industry say that privatisation would have been unlikely without the results of the nuclear review. I take that as an assurance that we will know about that. After all, what company could make a bid for the work without knowing the UK nuclear industry's future? The two Opposition parties are good at criticising Government policy on everything under the sun, but they have failed to tell us their thinking on the nuclear industry. The trade unions in the nuclear industry 726 have quietened some of the more vociferous anti-nuclear protestors who have been screaming about closing down the industry, but that threat is still very real.
The fast breeder reactor programme was put on ice because we know that, in the next 30 years before it will be needed, it is likely that there will be a Government of a different political persuasion. What was the point of this Conservative Government spending taxpayers' money now when the Liberal Democrats and the Labour party have said that they would not build the reactor, even if it was in the market interest to do so. I notice that the hon. Member for Wolverhampton, North-East is shaking his head. I hope that he will mention that in his speech. The hon. Member for Workington (Mr. Campbell-Savours) is wandering around looking rather lost. Perhaps he would care to remain in his seat.
§ Mr. Bruce
I am glad to hear that.
I want to talk about the future and the nuclear review. I know that John Collier, the chairman of Nuclear Electric, is keen to see that the great success that has been achieved by himself, his management team and every employee in the nuclear industry is recognised by the Government. They want to know that the Government realise that the nuclear industry is no longer a lame duck. It needs to be given the ability to go out and sell itself to the distributors and those who want to buy electricity in a profitable way. At long last we are starting to see the promise of the nuclear industry being fulfilled.
We need to know about the programme for decommissioning. We need to know whether the Magnox stations will be decommissioned at a faster or a slower rate and we need to know about the life of particular types of power stations. It is important for people to know that before we privatise AEA Technology.
It has been mentioned that Barclay Laboratories may move away from the control of Nuclear Electric and into a possible merger with AEA Technology. That is important and it also needs to be looked at before we sell off AEA Technology.
I am sorry that I am losing the attention of Opposition Members because my notes say that at this point I should deal with the policies of the Labour party and the Liberal Democrats on nuclear electricity. However, there is then a blank in my speech. That is because, since the Opposition parties were trounced at the last general election, we have heard very little from them about that subject. Opposition Members may wish to campaign in my constituency, but some of those in my constituency have been in the nuclear industry for 30 years. They want to hear words of comfort from the Opposition parties. They do not want to hear that the Opposition parties are void of policy and fresh thinking. They want to hear that the Opposition know that we need a home nuclear industry to go out and sell our industry overseas. The Opposition are failing their constituents and the few of my constituents who choose to vote for them by not telling us about their policies.
§ Dr. Moonie
I am afraid not. The hon. Gentleman can hardly expect any party to come forward with plans for 727 the future of the nuclear industry before the nuclear review is public knowledge. Any future plans for our energy generation must depend on that.
§ Mr. Bruce
I am grateful to the hon. Gentleman for an assurance that the Labour party will announce its nuclear policy shortly after the Government announce the nuclear review. I shall remind him on 1 January 1996—that should provide a sensible amount time for both those things to happen—that he will be announcing, as soon as is practicable, in a pamphlet or some other form what will happen with the nuclear industry over the next three or four decades when, eventually, the Labour party comes to power.
I have been speaking for more than long enough to give an indication of my feelings on this issue. I entreat the Government to rely upon the staff at all levels within AEA Technology. They should be able to offer a positive view about what they feel should be happening in their own industry. The Government should listen to their concerns and recommendations and do whatever they can to reassure them. Her Majesty's Government owe a debt of gratitude and a duty of care to AEA's employees. I support the Bill enthusiastically, but I can assure Ministers that I will continue to remind the Government of these important matters and ensure that they do not short change this country's nuclear industry in any way.
§ Mr. Robert Maclennan (Caithness and Sutherland)
The hon. Member for South Dorset (Mr. Bruce) proclaimed himself a friend of the Government and a supporter of the Bill, but each of his questions was like a dagger being struck through the cloak or toga of the Minister. By the end of his speech, his friendship seemed like the friendship of Brutus for Julius Caesar. There was not a great deal left of the Bill by the time he had finished. Since he felt it necessary to refight the battle of the steam-generating heavy water reactor some years after the event in order to prove a rather arcane point about the right hon. Member for Chesterfield (Mr. Benn), I do not think that I shall follow him very far in his comments.
I thought that the more penetrating question came from the hon. Member for Wantage (Mr. Jackson) in his intervention during the Minister's speech. He asked whether the House would have any say about the mode of privatisation. The Minister's reply was oracular and oblique, when it should have been direct and straightforward. If the Minister is not prepared to tell the House today why and in what manner he proposes to privatise the industry, the Bill should never have been brought before us. The Bill leaves more questions unanswered than answered.
The Monopolies and Mergers Commission was invited by the Government to make good the deficiencies of their own thinking about the nuclear industry. In 1992, it produced an authoritative report that explicitly said that the privatisation of the commercial parts of the Atomic Energy Authority should be postponed until after the nuclear review was complete. Yet the Government have today brought the Bill before us for Second Reading, not heeding the advice of their own commission.
The Government have had report after report on the future of the AEA and its commercial activities. They have been consistent in their inconsistency. The first of the reports—the McKinsey report—was totally 728 inconsistent with the BZW report. BZW proposed that the whole of AEA Technology should not be privatised as one enterprise and that the commercial division, as it then was, should be made available to any comer to pick off the pieces that it thought it might acquire. That view was cited as support for the argument by the Minister responsible for privatisation, but he has not been clear this afternoon about whether he accepts the logic that, according to BZW, there has not been any evidence of a single purchaser willing or interested in acquiring AEA Technology.
That lack of evidence was in a report published two years ago and there may have been developments since then; but, if there have been, it would have been candid of the Minister to tell the House this afternoon. What are these developments? Who is waiting in the wings to purchase the commercial interests of our British research effort?
We know already who has been picking up the pieces in other areas. It was announced recently that Procord was taking over the facilities service division, of which the hon. Member for Kirkcaldy (Dr. Moonie) spoke. As the hon. Gentleman mentioned, Procord is very closely associated with Sir Anthony Cleaver, the current chairman of AEA Technology. I cast no aspersions whatever on Sir Anthony, but the connection is noted and it inevitably raises questions. It raises similar questions to those raised about the new director of Dounreay, whose association with Hunting-BRAE has also been noted. Questions have been asked about whether he is fattening up his new charge for the picking by someone else with whom he was associated in former commercial activities.
§ Mr. Maclennan
As a matter of fact, I have already said that in my constituency. I do not hide behind the shield of parliamentary privilege to make claims of fact.
The Bill seems flawed from the start by its uncertainty. It asks the House to give the Government a blank cheque, as the hon. Member for Kirkcaldy said, and to enable them to choose the moment at which they will flog off however so much they choose of the United Kingdom Atomic Energy Authority's commercial activities in a manner unprescribed by the Bill, save for the exclusion of certain responsibilities for nuclear safety and certain freehold property. Such an enabling Bill brings legislation into contempt. It is not the purpose of Parliament to write such broad prescriptions to enable Ministers to do as they like, when they like, for whatever cost or charge they like and with so little explanation of the reasons why.
It is said that it is necessary to capitalise on the commercial activities of UKAEA, especially of AEA Technology. There is a tendency to confuse ends and means and, in particular, to confuse the proper role of the AEA, which has been to provide a research facility for the nuclear industry, to keep this country at the forefront of that industry and to ensure contemporaneously that the decommissioning and waste management work is done with the highest regard for safety and the environment.
That is certainly true and we can take pleasure and pride in the AEA's diversification of its activities on the margin into important areas of research which are not directly related to the nuclear industry. Those opportunities, however, have been ancillary to its core duty and there is some evidence that the Government are 729 losing sight of that core duty and its role: it is to secure a safe nuclear component for energy generation in this country.
It cannot be surprising that emphasis on new commercialism is giving rise to concerns around the country that the core function of the authority is being lost sight of and that it will be put in jeopardy by the approach to privatisation, for the companies involved have commercial ends. They are concerned more with profits and less with service provision.
The hon. Member for Wantage deserved a less obscure answer than that the Minister's words would repay careful study. However one studies the words, if one studies them like the words of a medieval schoolman for meaning or with the ingenuity of Michael Ventris trying to decipher Mycenaean Greek and linear B, the message is clear: the Minister is not prepared to say. It is not that he does not understand that he is asking the House to allow him to do what he wants when he wants. He is simply—transparently—not prepared to declare his purpose today.
Is the outcome to be a management buy-out? Sir Anthony Cleaver says that that has not been seriously considered. Has it been seriously considered by the Department? Perhaps the Under-Secretary will tell us. From the wreathed smiles of the Minister, we were supposed to divine that, perhaps, that had not been entirely ruled out. Is it to be a trade-sharing approach, which explicitly won the backing of BZW, or the cherry-picking approach, which the hon. Member for South Dorset apparently does not favour? The hon. Gentleman, at least, was not persuaded by the arguments put forward by BZW, but was the Minister persuaded? We are entitled to know. Is there to be a flotation? If so, on what terms and on what time scale?
The industry has suffered too much uncertainty. It is not fair to the people working in the business to reorganise and reorganise as has been done. There has been no Government vision, no direction and no sense. Indeed, I pray in aid what the hon. Member for South Dorset said about that, too, in his concluding remarks. From the date on which the Government established the trading fund basis, to which I did not object, a year has not gone by in which there has not been some fundamental attempt to rearrange the pieces on the chess board.
§ Mr. Ian Bruce
I am grateful to the hon. Gentleman for constantly referring to my speech. I hope that he will read it because, clearly, he was not listening to it. I wonder whether, on behalf of his party—I am glad to say that he has open house because no other Liberal Democrats are here to listen to him—he could tell us the Liberal Democrats' policy on nuclear power. The hon. Gentleman is a great advocate for his own constituents at Dounreay and is a regular attender of such debates, but one does not seem to get the same message coming from the Liberal Democrats' conclave at their conferences.
§ Mr. Maclennan
The Liberal Democrats have consistently supported nuclear research in their manifestos. We are concerned, as every party in the House should be, about the careful and safe management of nuclear liabilities. I believe that the Conservatives have done more damage to the nuclear industry than any other party in the House. I do not exclude from that point the party of the right hon. Member for Chesterfield, who 730 decided to do down the steam-generating heavy water reactor. He also introduced the Nuclear Installations Act 1965 which has enabled the build-up of commercial activity to take place.
When the Conservative party took office, we heard about the series ordering of nuclear power stations. Where has that series ordering been? In 16 years, we have had only Sizewell B, which has not been a notable success. The rather convoluted suggestion by the hon. Member for South Dorset about the decision in 1988 to close down the prototype fast reactor by Mr. Cecil Parkinson, as he then was, and should have remained, is scarcely credible.
I agree with the argument of the hon. Member for Kirkcaldy that it is damaging to the national interest to embark on the route of privatisation at this time. It is also conceptually unreal to seek to divide the nuclear from the non-nuclear and the commercial from the non-commercial because the non-commercial has led to the development of the commercial. The close integration of work on what was patently non-profitable allowed the research that has led to the development of skills in descaling and pipelines, which have been a profitable sideline at Dounreay. Such activity did not stem from a determination to go out into the marketplace to find new work. It stemmed from the application of skills that had been developed in the non-commercial field. The same is broadly true of other work done.
Will the Under-Secretary spend a moment trying to understand the risks involved in proceeding as the Government intend? I do not mean him personally, because he is new to the Department and to the Government. The AEA is moving from a site management model to a model that completely fractures the cohesion of the sites and the clearly understood missions of those working on the sites.
What has happened at Dounreay in the past couple of years is appalling, demoralising and disturbing. The facilities service division has been carved out and the whole structure of businesses, which was put in place only a couple of years earlier, has been dismantled. AEA Technology was up for grabs. Another series of provisions are in contemplation for the engineering services and for the decommissioning work of the Dounreay fast reactor which is, apparently, also to be made the work of another outside body brought on to the site.
Only yesterday, it was announced that a site managing agency arrangement will be entered into. That will bring on to the site yet another bunch of strangers who are supposed to pull the different organisations together into a coherent whole and to secure the safety and environmental acceptability of what is being done. They will have to ensure the commercial profitability of the parts of the industry that are commercial and they will have to deal with the core work of decommissioning and reprocessing. It is a pretty tall order, not just for those innocents who are straying abroad on to the site at Dounreay, but for all who have worked there for years trying to follow the latest twists and turns of Government policy and of the authority which has been beaten around so vigorously in recent years. It has been a matchless experience—a visionless waste of opportunity. I hope that something can be retrieved from the wreckage. Not much will be retrieved by the Bill.
§ 6.4 pm
§ Mr. Robert Jackson (Wantage)
I welcome my hon. Friend the Under-Secretary of State to his new position. This is his debut on the Front Bench and we all wish him well in his wind-up speech. He will have many questions to answer and I hope that he will be able to deal with them in the time allotted to him.
I have followed the development of the Atomic Energy Authority at Harwell in my constituency for 16 years, first when I became a Member of the European Parliament for the area in 1979 and subsequently as the Member of Parliament for Wantage since 1983. Harwell has been an impressive story of successful adaptation to adverse circumstances. The Bill, which will enable the privatisation of the bulk of the AEA, is a critical step in the process of adaptation and one that should help the authority to continue successfully in the future, if it is handled properly.
I support the Bill in principle, but I have a number of concerns about the way in which privatisation is to be effected and about the details, especially as they affect my constituents who work in the Harwell laboratory, at the AEA headquarters and in the Culham laboratory on the other side of the river in the Henley constituency of my right hon. Friend the President of the Board of Trade.
I offer some general reflections on the background to the Bill. The AEA belongs to a generation of organisations which can be found all over the advanced industrial world, from the United States through western Europe to the former Soviet Union. Almost everywhere, such organisations face considerable difficulties. It is important to bear in mind the fact that the AEA is not unique.
The generation of organisations to which the AEA belongs originated in world war two when science was applied with such success to political purposes in the shape of the atomic bomb. The model for the AEA was developed for scientific research for military purposes in world war two. Among its features were the idea of the crash programme and the total dedication of teams of scientists to a single objective. Economic considerations were largely discounted. The programmes were managed within a military-bureaucratic command structure. There was a marked emphasis on security, leading to the choice of physically remote sites. Harwell was constructed on a disused airfield in the countryside at some distance from Oxford and Reading. The best available young scientific brains were recruited on a permanent civil service basis.
Over the decades, since the establishment of the AEA, there have been many developments, some of which have been mentioned in the debate. They include the separation of the military aspects at an early stage, the spinning off of a number of commercially successful undertakings and the growth of non-nuclear work after the Nuclear Installations Act 1965. Yet the basic structures and the basic culture of the post-war period have remained in place and intact at AEA. They still seem to be in place and intact in the thinking of the hon. Member for Kirkcaldy (Dr. Moonie). It was interesting and ironic to find nostalgia for the world of Clement Attlee on the day after the national executive of the Labour party had voted to do away with clause IV in its traditional form. The hon. Gentleman, who is a psychiatrist, will know how to cope with this schizophrenia.
732 Forty years on, with the benefit of hindsight, when we look back at the construction of AEA and similar organisations after the war, we can pose questions that perhaps were not sufficiently fully considered at the time. What happens when the tenured brains, the scientific civil servants, grow older together? How is that to be managed in institutions relatively isolated from the wider academic community? What happens as science becomes more and more complicated, and there is an increasing need for interaction with other centres of research? What happens as the single-minded dedication of hot war and cold war fades, and economic questions increasingly raise their ugly heads? Above all, what happens when the concept of a single dedicated purpose becomes blurred?
All those question marks and others besides have been raised over many of the wartime and post-war research organisations. I remember vividly a visit that I paid to the German nuclear research centre at JÜlich in the early 1980s. That institution was comparable with Harwell, although slightly smaller, and it had suffered the cancellation of the project to which it had been dedicated and for which it had been established—the German "pebble" reactor, I believe. There was a moribund air about the place—hundreds of highly intelligent men and women with nothing much to do were waiting for something to turn up. In that case the hope was for a new dedicated project, an atom smasher, which was subsequently allocated elsewhere.
I remember thinking at the time that Harwell seemed to be in a much better position. But that was just before the British Government finally decided to go ahead with pressurised water reactors, and also just before the decision to privatise the electricity industry brought to the fore the real economic costs of nuclear power—or, more specifically, the costs of the outstanding nuclear liabilities.
Those developments in the Government's wider energy policy, dethroning the central objective of the UKAEA, for which it had been established, have posed for the authority profound questions about its identity and future. Although that presented huge managerial problems it also constituted a major human problem.
The approach of AEA, which I have followed closely as it has evolved over the years, has been to retain its nuclear strength as far as possible, while expanding its non-nuclear expertise and business. It has sought to internationalise its business and at the same time to become more like a business—a trend that leads from the 1965 Act through the trading fund of the late 1980s to the privatisation that we are considering today.
I believe that that fundamental reorientation has been tackled successfully. If we compare 1986-87 with 1994—roughly a 10-year period—we find that the nuclear business covered by a grant from the Department of Energy has fallen from 50 per cent. to about 27 per cent of AEA activity. That transition covers the end of all reactor development, together with an increase in decommissioning activity.
The non-nuclear business, on the other hand, has increased substantially. In 1986-87 about 5 per cent. of UKAEA activity was contracted to other Government Departments for non-nuclear work. That proportion has now risen to about 15 per cent. There has been a contraction in work done for the United Kingdom public sector as a whole, including what was formerly the Central Electricity Generating Board, from about 30 per cent. of AEA activity to about 20 per cent. On the other 733 hand, sales to the United Kingdom private sector have risen from 10 per cent. to 20 per cent. Sales overseas have increased from about 5 per cent. to about 20 per cent. That all constitutes a considerable success against an unpromising background.
There has been some reduction in the size of the organisation. That is sad but inevitable, and it has been well managed in human terms. Speaking as the constituency Member of Parliament for some of the people affected, I have to say that there have been few complaints and that I appreciate the approach of the Government and of the management, which have eased the pain of change.
However, I am not saying that the picture is altogether that of a smooth and easy transition. We got some of the flavour of what has happened, as seen from the perspective of Dounreay, in the speech of the hon. Member for Caithness and Sutherland (Mr. Maclennan). As he said, there has been much demoralising reorganisation and re-reorganisation. In that respect it might have been better if the Government had set privatisation as a target in the mid-1980s.
Although the trading fund was an important preliminary to privatisation, its introduction was associated with new structures, which have all now been reconstructed again for the purpose of AEA privatisation. But I do not think that we can blame the Government for not making up their mind earlier about that difficult and complex issue. I certainly cannot say that in the mid-1980s I was urging them to rush ahead with a programme of privatisation.
Perhaps the most important development to influence the Government's approach to such matters has been their new thinking on the wider issue of how Departments meet their research and development requirements—new thinking with which I had something to do as a Minister at the Office of Public Service and Science. Among other things, that new thinking has led Government to a clearer sense of the distinction between science for use and science for purely intellectual purposes.
I hope that the other great research institution in my constituency, the Rutherford Appleton laboratory, which is next door to Harwell, will continue to benefit from the Government's refreshed understanding of their special role and responsibility in relation to basic science. The mission of AEA and Harwell as institutions serving science for use has now been more fully clarified, although of course with some difficulties in connection with the former underlying research programme.
It is now much clearer that AEA's role in relation to Government is as a contractor organisation serving a market in which it is no longer tied to any single purchaser. The logic of that development must lead to privatisation, which will help to develop a wider customer base in the private sector and abroad to compensate for its loss of a secure tied customer in the form of the Department of Energy and the Department of Trade and Industry.
Before concluding my general observations about the Government's R and D procurement policy I shall make one more comment. For a contractual relationship to work successfully there must be two intelligent partners—an intelligent customer and an intelligent contractor. I am sure that AEA can function as an intelligent and business-like contractor to Government and to other 734 organisations. But I am not so sure that the Government are equally capable of acting in the long term as an intelligent customer.
Each Department has its own research budget, and all are subject to the annual public expenditure cycle. So long as organisations such as AEA contract preponderantly with the Government, their future must be vulnerable to fragmented short-term decisions in purchaser Departments. I see it as a critical role of the Chancellor of the Duchy of Lancaster and the Office of Public Service and Science to ensure that we do not waste important national assets by failing to adopt an overall strategic view of the role of the Government as a purchaser of R and D. It seems a pity that there is no Minister from that Department here for this debate on a most important scientific and technological matter.
I shall now deal with what I consider to be the critical issues of detail for the privatisation. First and foremost is the form of the sale, and the way in which that will affect the future integrity of AEA Technology. Like the management of AEAT, the unions there and my constituents who work at Harwell and Culham, I believe that the Government should attempt to privatise AEAT as a single entity, and should adopt a form of sale conducive to that objective. That is to say, AEAT should be privatised by flotation rather than by a trade sale.
There are many reasons why the privatisation should be unitary. First, AEA is already successful as a single company. It currently has sales of about £250 million and profits of £10 million, and the management forecast is that in three years sales will increase to £350 million, with profits of £40 million.
Secondly, much of the value of AEA Technology comes from its breadth of skills and its ability to assemble integrated multi-disciplinary teams of specialists providing a comprehensive range of facilities.
Thirdly, size is vital in winning business in overseas markets, where there is bound to be concern about confidence in continuity. Any suggestion of a break-up would undermine confidence and thus AEAT's ability to win large long-term overseas contracts. I am not sure whether the Government fully understand the way in which customers for services such as those provided by AEAT need to build long-term relationships with suppliers. If customers cannot see a long-term future for AEAT, they will have little incentive to stay loyal to it.
Fourthly, it is also important to recognise that the independence of AEAT from the suppliers of capital goods gives it a significant advantage over many of its competitors, and a break-up and trade sale would threaten that independence.
Fifthly, the Government must recognise that businesses such as AEAT are above all people businesses, and I was pleased to hear what my hon. Friend the Minister of State said about that. The key asset of a business such as AEAT is the skills and ability of its work force, the best of whom will go elsewhere if they feel uncertain about their personal future. Losing contracts and staff will waste a national asset and if that is not a primary concern of the Treasury, it must be said that that would also reduce the sale price of AEAT.
Sixthly, in recognising that this is a people business, it is important that the form of the sale should be such as to facilitate employee participation in the ownership of the new company. The Government believe in that in 735 principle, and I noted my hon. Friend the Minister's personal support for it. Employee participation is particularly important in an organisation such as AEAT, and it should be a major consideration in pointing in the direction of a flotation as a way of dealing with privatisation.
Seventhly, we must also recognise that although the nuclear role of AEAT has diminished, it is still of critical importance in providing the integrated services required by Britain's nuclear generators and by NIREX. If AEAT withers and fragments, the only alternative to customers will be to go overseas, which will lead to the further erosion of the British technology base.
Eighthly, technology transfer is critical to the success of a technologically oriented economy and happens routinely within the present structure of AEAT. Fragmentation would make that more difficult, and in particular it would reduce the impact that AEAT can have in helping small and medium-sized enterprises to benefit from technology transfer.
When the privatisation decision was announced in November, I wrote to my right hon. Friend the President of the Board of Trade to press the Government to give assurances about their intentions regarding the future structure of AEAT. I pressed for the privatisation to be accomplished by a flotation, rather than by an offer for sale, as being the most likely means of producing the structure we need.
I received a reply on 15 December from the then Parliamentary Under-Secretary for Industry and Energy, who recently left the Government in rather odd circumstances, in which he said:I appreciate that you and other colleagues in the House will be looking for some statements on our intentions".We have been given some helpful clarification by the speech of the Minister of State, and I particularly noted my hon. Friend's words about selling AEAT as a single integrated whole. That is an important commitment on the part of the Government, and it is one that I take seriously.
However, I was not convinced by my hon. Friend's remarks about the core business of AEAT, a topic about which we had some exchanges during his speech. Nor was I satisfied by what my hon. Friend said about the role of Parliament in relation to the final decisions which the Bill will enable.
The other major issue that arises from the privatisation concerns the vexed issue of the continuity under new trading conditions of employee rights and privileges which have been built up over the years in the public sector, the most important of which concern pensions. I am sure that we will have an extensive debate about that in Committee. I note what my hon. Friend said about the Government's desire for a fair and just settlement, and I am sure that they will honour that commitment.
The trade unions at AEAT tell me that they are seeking a continuation of index-linking and that they expect the rights of employees to be protected in this Bill on the same basis as they were when the atomic weapons research establishment was contractorised. There may be a significant parallel in that case, although I am aware that it is not completely analogous. I would be grateful if the Minister could state where he sees the points of similarity or difference between this privatisation and the contractorisation of the AWRE, with special reference to pensions.
736 The unions have also made sound points about the management of redundancies, and they have pointed out that redundancies become more difficult to resolve when the size of the employer decreases. They argue the case for dealing with redundancies in common across all the companies, so that the best possible use of redeployment and retraining opportunities can be made while avoiding unnecessary costs and unnecessary additional redundancies.
The unions are arguing that each company into which employees are transferred—whether it is publicly owned or not—should have redundancy rules and payments to mirror those of the UKAEA. That would, of course, be a constraint on the new management, but there may be a case here which deserves consideration, as does another union point concerning general redeployment across successive companies. There are many employees who have a breadth of experience and many areas of skill within AEAT and, therefore, potentially in the successor companies. It would be of benefit if employees were able to apply for vacancies in any successor companies, as long as they remain in public ownership.
I believe that the Bill is to be welcomed in principle, but the way in which the privatisation is to be effected raises a number of serious questions on which Parliament should expect to continue to be consulted. In one of my interventions during the speech of my hon. Friend the Minister, I noted that the Bill gives the Secretary of State [...] to reorganise or transfer parts of the UKAEA, or to approve such action, without further reference to Parliament. I am not happy about that. The Government should give an indication in Committee of how they will provide further opportunities for parliamentary debates and votes once the Bill has been passed and the privatisation process has begun.
§ Mr. Andrew Miller (Ellesmere Port and Neston)
I shall outline one or two general points of interest to hon. Members before I come to the thrust of my comments. I approach the debate without the single fixed ideology that seems to exist on the Government Benches, that everything that is in the public sector is best in the private sector. Nor do I take the view that everything in the private sector is best in the public sector. I take the view that we need to take a balanced approach to the needs of the British economy and British science.
I shall illustrate my point by bringing to the attention of the House the Office of Population Censuses and Surveys. I thought that it was entirely wrong for the OPCS as an institution to be privatised, but I could see that there was a sound logic in privatising the purchasing and provision of its computer hardware. That area could best be dealt with in the private sector, and the public sector could not move fast enough to meet the needs of the rapidly changing technology.
When the Select Committee on Science and Technology took evidence from the Chancellor of the Duchy of Lancaster on the scrutiny review, we were given an assurance that issues in the interests of British science would take precedence over the Government's ideology. But once again, we see in this debate that that is not the case. The Government start with the ideology and fix their arguments around it to ensure that they end up with the formula that they want.
737 I worked for several years in geology using X-radiation as an analytical tool. In that period of my life, I took a great deal of interest in the work of the Atomic Energy Authority and many of its spin-off technologies, which have been discussed in today's debate. I have the British Nuclear Fuels location at Capenhurst in my constituency. I reinforce the point made by my hon. Friend the Member for Kirkcaldy (Dr. Moonie) in response to an intervention from the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown), who has now looked up from busily scribbling his notes, that BNFL and more recently Urenco, the newly floated subsidiary and partnership with the Dutch and German industries, has worked remarkably well within the public sector, but outside the constraints of the Treasury rules. Those models can and do work. If the Government woke up to the opportunity, they could be applied to other industries. The Post Office is well at the top of my list, but other parts of the public sector could also be considered.
§ The Parliamentary Under-Secretary of State for Industry and Energy (Mr. Richard Page)
The hon. Gentleman keeps referring to how commercial activities can be run under some sort of state umbrella. Why did not the Labour Government do that for British Telecom in the late 1970s when it badly needed money for development?
§ Mr. Miller
The Minister raises an interesting point, but the difference between now and then is the enormous technological leaps that have been made in the science base of that industry since that time. System X was not on stream then. It is on stream now. It has taken us into a new generation of technology and the arguments have changed dramatically. If the Minister wants to come back and use the same argument for any other industry that has a science base, I can find an equally logical argument for him. As it happens, I know a little about the technology of the telecommunications industry. [Interruption.] I think that the Minister said from a sedentary position—I do not want to put words in his mouth—that it would not wash. It will wash. That fact can be demonstrated by a careful examination of the telecommunications industry.
§ Mr. Clifton-Brown
Is not the real reason why a public company cannot operate within any public sector rules that industries always come behind the vital public services such as our national health service, education and everything else in the queue for investment? Therefore, companies such as the Post Office and AEA Technology are always starved of investment funds. That is why companies such as British Gas, which has tripled its investment since privatisation, have become worldwide successes.
§ Mr. Miller
The hon. Gentleman makes an interesting point in the context of the Post Office as it is currently formulated, but the Government have allowed BNFL and its new subsidiary Urenco commercial freedom to raise money in the markets. The answer is that if the Treasury rules need to be changed, let us change them. If there is joint interest among hon. Members on both sides of the 738 House in achieving a balanced approach in the interests of British science, those Treasury rules could be changed immediately.
§ Mr. Keith Mans (Wyre)
The hon. Gentleman mentioned BNFL. Clearly, a way was found in the past to give a certain amount of commercial freedom to BNFL. Does the hon. Gentleman agree that the classification recently suggested for BNFL by the Central Statistical Office highlights the problem of public companies in the public sector trying to act like private companies? A much simpler solution is to put them in the private sector to avoid the problem that has occurred.
§ Mr. Miller
The hon. Gentleman looks for a simple solution. I think that it is a simple solution based on a one-track ideology. If there are problems based on the Treasury rules, the answer is to change the rules.
In the past 18 months I have had the privilege of undertaking a study of Nuclear Electric under the auspices of an Industry and Parliament Trust fellowship. Some of the points that have come out of that study are inappropriate to the debate and it would be unfair to Nuclear Electric to bring them to the attention of the House. I am committed to making a presentation to the company early in April. That experience has been particularly enlightening.
It was interesting that the Minister failed to respond to the observations that I made about the effect of this privatisation on Berkeley Technology Centre. I know that the Minister has been there. He visited the centre just a few weeks before I did. It is interesting that in his speech he failed to understand that there were overlapping areas of research. They deliberately overlap at present for the clear reason that it is necessary to separate the power generators' responsibility from the responsibilities of the parts of the industry that provide advice to the Health and Safety Executive. I understand that that is the principal reason for that overlap.
Given what the Minister said, it is difficult to see how we can be assured, without knowing what is in the nuclear review, that those commitments can be maintained. We heard from the hon. Member for South Dorset (Mr. Bruce) that he and, as we know, other Conservative Members want to dispose of the nuclear industry. One can easily envisage a commercial link in a free market between Berkeley Technology Centre and parts of what is currently the Atomic Energy Authority. Such a link would not be in the public interest. There seems to be no provision in the Bill to deal with that. We have no prior knowledge of the content of the nuclear review. That fact alone provides a powerful argument for deferring any decisions on taking forward the Bill.
The House should congratulate the Library on its publication 95/32. It has provided an extremely well set out series of points for hon. Members participating in the debate. I intend to draw on the document in a few moments, but, first, I should like to comment on a few of the points that the Minister made. His first sentence was that the Bill did not lead to nuclear privatisation. I wonder whether the Under-Secretary will make a statement to the House on whether the Government have dropped the idea of nuclear privatisation. The debate would be far more logical if we had an understanding of what the Government were doing. We have pressed on several occasions for information about the review and we have not obtained an answer.
739 I do not know what is in the nuclear review. I guess, because he is not intervening, that the Under-Secretary does not know what is in the review. If he does know, he has chosen to withhold the information from the House. That puts the House at a disadvantage in this important debate.
§ Mrs. Anne Campbell (Cambridge)
Does my hon. Friend agree that the difficult position in which we find ourselves is caused by the Government's lack of any energy policy and the difficulty that that creates in many other Government Departments?
§ Mr. Miller
I hope that my response to my hon. Friend does not bring about the demise of some of the people whom I have met during my study of Nuclear Electric, but the one consistent theme has been that the only energy policy that the Government have is to have no energy policy. If that is the message that comes from the heart of an industry that provides about 25 per cent. of our power supply, it does not bode well for the future of the country's energy policy.
§ Mrs. Gillan
If the hon. Gentleman is so preoccupied with what he perceives to be a lack of balance by Conservative Members, perhaps he would care to outline for the House, especially following the redrafting of clause IV, exactly what the Labour party's energy policies are. Do you intend to take privatised companies back into the state sector, and what are your party's policies vis-àa-vis the nuclear review?
§ Madam Deputy Speaker (Dame Janet Fookes)
I remind the hon. Lady that I am not answering the questions.
§ Mr. Miller
I shall not rise to the bait of asking whether the Office of the Speaker has a policy on energy. To answer the hon. Lady's question, it is obvious that the Labour party envisages a role for a balanced economy in which the private and the public sector will play a role. I think that the hon. Lady invites me to recite the new clause IV, but I think, Madam Deputy Speaker, that you might, on a few marginal points, rule me out of order because some of the international aspects of it are not relevant to the debate.
The Minister said that the Bill presents new opportunities and new horizons for the employees. If that is correct, why do the employees—not in information that they have provided to Opposition Members, but in information that they have obviously provided to Conservative Members—express such anxiety? They are less than confident about the new horizons that are described, and it seems to me a little unfair of the Minister to make that comment.
The Minister dodged the issue on Berkeley Technology Centre, which emphasises the fact that his ideas of new horizons and new opportunities float around in his head but have no substance.
The hon. Member for Wantage (Mr. Jackson), in an intervention, asked what the core business of AEA Technology is. All Members of the House could perhaps agree on one matter—that the core business is based on people, and that the role of people in the industry is very important.
740 Naturally, the Minister would have great difficulty in defining precisely the core business of the industry because, as his opening speech made clear, the company in its current form has engaged in research and development in a wide spectrum of activities that have stemmed from its original responsibilities to the atomic energy industry, but there have been some remarkable spin-off technologies. Indeed, the hon. Member for South Dorset referred to that.
Given that that is the case, it is extremely difficult to envisage a way in which currently prevailing opinion in British industry will properly manage a people-based organisation that is a science institute in itself, when the overriding dogma of the boardroom today is to dispose of non-core activities. The only solution is for the company in its new form to engage in a proper system of management by objectives.
I have observed, in recent studies, some areas where the proper application of management by objectives has resulted in the reversal of the traditional British boardroom dogma of getting rid of non-core activities. Obviously, there are occasions when some companies may not be best equipped to provide their own canteen services, and therefore dispose of them as a non-core activity to a third-party specialist company. One may accept the logic of that.
However, in a company as complex as AEA Technology, to engage in a debate about what is the core of the business understandably gives rise to the anxieties that employees express at present. As no one can define the core business, no one can define which part of the company will have a safe group of employees in it. Therein lies the problem that gives rise to the major part of the anxiety being expressed by employees.
The hon. Member for Amersham—
§ Mr. Miller
The hon. Member for Chesham and Amersham (Mrs. Gillan), to give the full title, referred in an intervention to the issue of employee participation. I am glad that she did so, but I hope that she noticed that the Minister dodged, in his response, any suggestion that the employees might have full voting stock in such a company, or control of such a company. No; the Minister has fixed ideas about the nature of any flotation and, frankly, I believe that he should have clarified to the House exactly what he meant.
I said that I would refer to some of the comments in the Library brief. There is an interesting observation on page 7 about the history of the position in which we find ourselves today:An important development which influenced the proposed privatisation of AEA Technology was the publication, in 1992, of a Monopolies and Mergers Commission report on the service provided by the UKAEA.
That was described in a written answer on 13 May 1992. A question was tabled by the hon. Member for Colne Valley (Mr. Riddick). I do not know what his interest is in the industry. It was responded to by the then Under-Secretary, the hon. Member for Tatton (Mr. Hamilton). Both hon. Gentlemen have moved on somewhat since that time. The hon. Member for Colne Valley asked the President of the Board of Tradewhen he proposes to publish the Monopolies and Mergers Commission report on the United Kingdom Atomic Energy Authority; and if he will make a statement.741 The hon. Member for Tatton said:The report is published today.That is, 13 May 1992.The commission was asked to carry out an extensive inquiry into the efficiency and costs of and the service provided by the United Kingdom Atomic Energy Authority".It is obvious what the interest of the hon. Member for Colne Valley was on that occasion. It was a planted question.The commission reports that it was… impressed by the expertise, enthusiasm and dedication of the AEA's staff'.— [Official Report, 13 May 1992; Vol. 207, c. 144]
That is an important issue. Hon. Members on both sides of the House have expressed worry about the effect of the proposals on the confidence and morale of staff, and I think that the Government should have paid heed to the MMC's observations about that before rushing through with their views.
The hon. Member for Chesham and Amersham also gets a mention in the Library brief. It refers to the debate of 21 November 1994, and quotes her as saying:I do not want the benefits and the position of the nuclear-related companies strangled by the provisions that might be deemed necessary for their parent industry".— [Official Report, 21 November 1994; Vol. 250, c. 422.]The hon. Lady hit the nail on the head. I suspect that she was not quite thinking in these terms, but it struck me that the parent company in this case is Her Majesty's Government, who seem to be on a self-destruct course in whatever they do. Perhaps they will be strangled rather than any part of this country's science base.
§ Mrs. Gillan
I thank the hon. Gentleman for giving way and I am flattered that he chose to quote me from an earlier debate on the subject. As to his point about morale, has he visited AEA Technology in the past year to talk to staff about morale and the way in which they are reacting to the proposed privatisation?
§ Mr. Miller
I shall refer to observations from some of the AEA Technology staff representatives later in my contribution and I hope that the hon. Lady will take note of the serious points that they raise.
The Barclays de Zoete Wedd terms of reference set out a number of points of which the House should take note. It is curious that BZW has been given the task of carrying out a study with incomplete terms of reference. I do not believe that that is the correct way to undertake an objective analysis of the problems perceived by the Government. The BZW terms of reference contain nothing about the impact of any conclusions on publicly funded science. They do not refer to pensions or to the knock-on effect of privatisation for other Government Departments. I shall refer to those points in some detail later in my speech.
The fact that the Government set the terms of reference in order to minimise the costs for the British Government sticks out like a sore thumb. They do not seem to have considered the interests of British science. Hon. Members know—perhaps some better than others—that one of the major problems facing Britain today concerns our nation's failure to convert the fruits of our scientific base into profitable manufactured goods. If one adds to that the attempted destruction of part of our scientific base, one can see how the situation will worsen.
742 Perhaps the Minister will explain in his winding-up speech why BZW's terms of reference do not require it to analyse the effects of the proposed privatisation on our national research and development and scientific base. That is a major omission. I shall refer to pensions in some detail in a moment. However, I hope that the Minister will also explain why BZW—although not all merchant banker firms have good reputations these days, presumably it has some expertise in managing pensions——did not make any observations to the Government on pensions. Why was that not included in its terms of reference? Was BZW asked to analyse the effects of the proposals on other Government Departments? The Government were interested only in minimising the cost to Her Majesy's Government in achieving their ideological goal of privatisation.
Extensive reference has been made to the problems of decommissioning and, once again, it is a very complex area. There is widespread dispute within the science community about decommissioning, with different factions arguing about the right course to take. Some important activities are going on at the moment. The hon. Member for South Dorset referred to Winfrith and, as the Minister is aware, a couple of other stations are currently in the process of decommissioning.
The complexity of the engineering process—it is not simply a question of dismantling office buildings; it is far more complicated than that—means that there are new engineering and science achievements on a daily basis. I do not think that we are maximising the potential of that exciting spin-off in this country. As hon. Members saw from the exhibition in the Upper Waiting Hall a few weeks ago, some extremely exciting engineering developments have emerged from those technologies and there is a world market for them.
The tools that have been devised by Berkeley and similar innovations by the Atomic Energy Authority for accessing the core of active power stations represent quite extraordinary engineering feats. We are undoubtedly ahead of the world market in exploring those technologies. Given the uncertainty of what is happening in terms of the nuclear review and in the context of the legislation, there is a powerful argument for standing still and awaiting the results of the nuclear review. We could then reach a rational decision in the best interests of the exploitation of science and engineering in the long term.
§ Mr. Miller
Although the hon. Gentleman has only just entered the Chamber, I shall give way to him as I know that he has an interest in engineering.
§ Mr. Miller
If the hon. Gentleman had listened to the Minister's speech, he would have heard him praise the work that the Atomic Energy Authority is doing in eastern Europe. However, that valuable work is being done today; there is no evidence that that science and engineering skill will advance any faster under a privatised company. It is happening now while the company is in its present form.
743 There seem to be a series of problems relating to the pension fund. There are no real guarantees on what will happen after the takeover. One problem is that, whoever the previous owner of a company is, it is extremely difficult for that previous owner to exert any real long-term control over the development of a pension fund after the business has changed hands.
In my previous life I negotiated on major pension fund takeovers, some of which were extremely controversial, such as the merger between GEC and Plessey, the partial sell-off to Siemens and the involvement of Ferranti—very complex pensions issues. It is not reasonable to expect the previous owner of a company to give guarantees in perpetuity. Because of that, the Government have a solution at their disposal—to do precisely what they did with Amersham International and protect the employees by giving them the opportunity to remain within the civil service pension scheme until such time as individuals choose to move out of it. That is what happened with Amersham International.
The Government have changed the rules since then, not because there was any logical pension argument for doing so, but because the Treasury required them to do so. The forward commitments of a pension fund are clearly matters which, under the current Treasury rules, are seen as impinging upon the public sector borrowing requirement and it is clear that the Government have reached that conclusion because their intention is to lower the PSBR and not to look after the best interests of the Atomic Energy Authority work force.
Last year, when the House debated the change to the milk industry——a slightly different industry, but the pension argument remains precisely the same—a similar series of questions were posed in relation to the transfer of the milk marketing board pension scheme to Milk Marque. It is clear that at the time the Government had no adequate answers to the logical comparison that was drawn with Amersham International. There is clearly no logical argument throughout the series of privatisations. The Government could quite simply build in a protection in the interests of the pension fund members, which they claim to hold dear to their heart, by offering them the opportunity to have the same provisions that were available at that time. Obviously, the civil service scheme has moved on, so the actual application would be slightly different, but the principle remains valid.
Why are the Government structuring the Bill in such a way? Why can they not treat the work force in the same way as that of Amersham? It is clear that different groups within Government Departments have different interests in the matter. Even if the Minister were able to convince the House on the merits of the privatisation in the interests of science and of the British economy, I suspect that he would fail to convince his Treasury colleagues on how best to protect the interests of the pension fund members. The Minister must remember that the TUPE regulations did not extend to pension schemes, but the principle can be extended by the will of the parties engaged.
I looked carefully at the paragraphs in the explanatory and financial memorandum to the Bill under the heading "Financial Effects". It is interesting that the Government have included phrases that could potentially let them off the hook. The third from last paragraph starts:If transferred employees transfer their accrued pension rights in the Authority's pension scheme".744 I suppose that the Government could get themselves off the hook by working on the word "if" and changing their mind, without any great embarrassment. It appears that all the Minister has to do is convince his Treasury colleagues of the logic of that proposal.
Reference was made earlier to the role of Sir Anthony Cleaver in the creation of Procord. The Minister, in a blunt intervention, made it clear that Sir Anthony Cleaver had stood away from his responsibilities within AEA when Procord was being created. A statement issued on 7 March makes it quite clear that Sir Anthony must have known an awful lot about the way in which Procord was going to perform in the marketplace and what was being offered by the Government. He is quoted extensively in a press release, in very buoyant terms:
I am confident that Procord will be an excellent employer".I wonder whether that view will be held by everyone. He continued:and I am sure that FSD staff will find new opportunities as part of a company whose core business is facilities service and management.The entire press release is very buoyant and seems to reflect a detailed knowledge of the company. One has to draw conclusions from that.
The hon. Member for Chesham and Amersham asked about my knowledge of the industry. She will be aware that Risley is a stone's throw from my house. I can see a large part of the industry from my house. In the past, I had a great deal of contact with people on the Harwell site.
In a letter to my hon. Friend the Member for Warrington, South (Mr. Hall), whose constituency incorporates a large part of Risley, the staff representatives refer to the UKAEA letter setting out the proposals:The UKAEA letter says that they"—the company—are committed to safeguarding terms and conditions of employment for employees in each divestment. However, despite many requests, UKAEA have not offered any agreement on: index-linked pensions security of redundancy payments or protection beyond the legal minimum offered by TUPE.That is the view of the staff representatives.
One must express concern about the Government's failure to take into account the interests of the employees to the fullest extent. The Minister said that he would give a great deal of weight to management and staff. If he is serious about that, these are the specific points that concern the staff. I put them on the record because they set out some powerful arguments about why the Government need to think again.
I offer the House a series of explanations. First, the Bill is defective because it says nothing about the existing organisation and retention—[Interruption.] The hon. Member for Chesham and Amersham laughs. Is she not interested in the views of the staff?
As I was saying, the Bill says nothing about the organisation and retention of UKAEA under direct Government control, dealing with decommissioning old reactors and safe nuclear waste disposal. That concern has been raised by a number of hon. Members in the debate, although they hold different views about the future of the nuclear industry. Given that that view comes from the heart of an organisation in the industry whose sole core is its people, the Government should take note of that point.
Secondly, the Bill says nothing about AEA Technology being retained as a comprehensive undertaking. The fragmentation of its renowned collective skills and 745 expertise would destroy valuable synergy and make it difficult to present for sale. The Bill may become a charter for cherry picking. Given some of the spin-off technologies that have emerged from the business in its current unified state, that is another powerful argument. Some of those spin-off technologies, which have benefited the national health service, for example, are unlikely to emerge if we allow a cherry-picking operation to prevail.
Thirdly, the Government are expected to announce the outcome of the nuclear review very shortly. It is likely that that will have implications for the future of UKAEA. The Bill should not pre-empt those recommendations. I have made that point already and shall not dwell on it.
Fourthly, the Bill would specifically prevent employees' existing pension rights being transferred to the private sector. I stress the word "existing". Proper employment protection, including underwriting of redundancy rights, should be incorporated in the Bill as it was with the recent privatisation of the Atomic Weapons Establishment. I have covered that point as well.
Fifthly and crucially, the Bill leaves wide open options as to how UKAEA is to be split up and AEA Technology might be sold. It could either be kept together or split up in a series of trade sales. There are huge uncertainties about the form of privatisation, which the Bill does not resolve. The Government have yet to clarify the extent to which they would accept a management-employee buy-out. Would they be prepared to allow a scheme whereby management and employees had all the voting stock spread among themselves? The Government need to think carefully about that proposal.
Finally, the Bill gives the Secretary of State powers to reorganise or transfer parts of UKAEA, or to approve such actions, without reference to Parliament. Colleagues on both sides of the House who express concern about what is down the line from the Bill should take careful note of that observation. Parliament should have the power to approve such actions.
The Bill is driven by a one-sided ideology based on the Government's determination to dispose of a jewel in the crown of British science. They do so only because that will provide a few more pennies in the Treasury's coffer.
§ Mrs. Gillan
I object to the idea that this is one-sided ideology. Is the hon. Gentleman aware that AEA Technology conducted a MORI poll among its customers, 84 per cent. of whom said that privatisation was desirable for AEA Technology?
§ Mr. Miller
The hon. Lady has a background in marketing and could sell ice-cream to the Eskimos. The simple fact is that two other constituencies matter: first, the work force within the company; and, secondly, Great Britain plc. There has been no analysis of Great Britain's interests nor a specific analysis of the interests of the work force, otherwise the Government would have included those requirements in the terms of reference that they set out to Barclays de Zoete Wedd in the first place.
The one-sided ideology based on the interests of the Treasury, not those of British science or the company's work force, must be addressed again. I invite the Government to think carefully about some of the observations that hon. Members on both sides of the 746 House have made about the genuine concerns that exist. Those concerns are based not on a one-sided ideology on the part of the Opposition that nothing can ever be privatised—I made that clear in my opening remarks—but on a determination that any changes in ownership should first deal with those key points.
§ Mr. David Lidington (Aylesbury)
I support the Bill on principle because, where Government can do so, they should disengage from the management of activities that are essentially commercial and free organisations to go out and seek customers untrammelled by Treasury rules or the risk of political interference, which is inevitable when an industry is part of the state.
I bear in mind Opposition Members' points about the nuclear review but hope that this will be the first stage of greater private sector involvement in the nuclear power industry, which I hope will follow from the results of the review. I hope that the hon. Member for Ellesmere Port and Neston (Mr. Miller), during his Industry and Parliament Trust fellowship with Nuclear Electric, studied fully the reasons why that company is pushing strongly for its privatisation as soon as possible.
§ Mr. Miller
I do not know whether the hon. Gentleman attended the interesting debate that took place in the Select Committee on Science and Technology a couple of months ago, when the only common ground between John Collier and Greenpeace was their desire to privatise the company. I think that they are both wrong. May I make it clear to the hon. Gentleman that I was studying the total quality management systems on which the company is embarking, which could provide some important lessons to the Government? Perhaps some TQM principles should apply to Ministers here.
§ Mr. Lidington
I was grateful for that response, not least because it showed that, when it comes to privatisation, "one-sided ideology", to use the hon. Gentleman's phrase, seems to be the property of the Labour party, whereas we have a rainbow coalition in support of greater private sector involvement in the nuclear power industry.
I support the Bill in principle and because on the doorstep of my constituency is Amersham International, a successful business employing a number of my constituents. It is an excellent example of a business that is not dissimilar to AEA Technology and that has made a tremendous success of its life in the private sector.
I support the Bill because I see privatisation as the best way to secure customers and, therefore, the jobs of the workers who, as hon. Members on both sides of the House have agreed, are the mainstay of AEA Technology's reputation and expertise.
My hon. Friend the Member for Wantage (Mr. Jackson) drew attention to the diminishing customer base of the domestic nuclear industry. The reports and accounts of AEAT highlight the new commercial world within which the business is having to operate. In 1991-92, for example, the company's sales to overseas customers amounted to £43.7 million. Two years later, the total had risen to £66.5 million. The story is similar for AEAT's sales to United Kingdom private sector enterprises. In 1991-92, some £40.5 million worth of sales were made. In 1993-94, the figure was £63.5 million. It is the private sector and 747 foreign markets for the ancillary services, which were originally developed as a sideline to the main nuclear business, on which the future of the company and, therefore, the security of the jobs of its employees will increasingly come to depend. It seems to me that we have a real prize in AEAT. We have an enterprise that is forging a lead in some of the technologies and services that will be in great demand throughout international markets in the decades ahead.
Reference was made earlier—I think by my hon. Friend the Member for Brentford and Isleworth (Mr. Deva)—to the work that is already being done by AEAT in helping to clean up the environmental devastation in eastern and central Europe, wrought by a socialist energy policy, which operated there for many years. AEAT, we know, is already actively involved in Slovakia and has contributed to the work of making good the devastation wrought by the Chernobyl disaster.
We must look globally at the future nuclear business of AEAT and not confine ourselves to discussion of the future of the United Kingdom nuclear market. I do not believe that developing countries will be able to deliver to their populations the standard of living that those people rightly want to see without using an increasing amount of nuclear power as well as power generated by the burning of fossil fuels. We see from recent reports that China is now either planning or is building 24 new nuclear reactors. In Japan, the institute of energy economics has predicted that Japan will need a significantly larger nuclear capacity if it is to succeed in its declared objective and, indeed, its treaty commitment, of curbing carbon dioxide emissions to their 1990 level.
There are international nuclear markets for AEAT to go out and win, and I do not think that we should be so pessimistic as to assume that the fate of the elderly reactors left with the remnants of the United Kingdom Atomic Energy Authority is the sole determinant of the business for the future. Freed to go into the private sector, I have every confidence that AEAT will be able to go out and win that international nuclear business for this country.
§ Mr. Ronnie Campbell (Blyth Valley)
The hon. Gentleman has just reminded me that I was thinking about watching "The Simpsons" on Sky Television, which of course is an American programme. Homer works in a private nuclear power station, and we see the disasters that happen from time to time. Does the hon. Gentleman envisage that happening in this country?
§ Mr. Lidington
I think that the whole House is grateful to the hon. Gentleman for his explanation of new Labour's energy policy for the future of this country. He has probably come about as near to it as his Front Bench representatives did this afternoon.
There are other important markets in which AEAT will be able to seek customers. The hon. Member for Caithness and Sutherland (Mr. Maclennan) referred to the descaling of oil and gas pipelines. That was developed initially as an ancillary service to the nuclear business, and there are a number of ways in which AEAT is already involving itself in the oil and gas industry. That, again, is an area that seems to offer considerable scope for business development in the future.
There will be opportunities in oil reservoir management. The company has already developed computer models to examine how oil and water flow 748 through a well drilled in a particular geology, and such as service is of real commercial benefit to oil companies in helping them to determine how best to go about exploiting the hydrocarbons that their geologists find in a particular field.
§ Mr. Miller
Does the hon. Gentleman agree that such technology, which has no direct connection with the atomic energy industry, emerged as a spin-off resulting from the diversity of the activities in AEAT? Does he not agree that there are risks that the potential for such exciting future technology will be damaged if there is a cherry-picking operation?
§ Mr. Lidington
Although I have not studied the subject in detail, and I found the argument made by my hon. Friend the Member for Wantage compelling, when the Government decide on the mode of privatisation they will wish to consider that argument carefully. The key consideration is that once AEAT is in the private sector there will be a commercial incentive for the board and for the management to seek out those opportunities wherever they arise, rather than to wait for them somehow to he handed down by departmental initiative.
Environmental services are another enterprise in which there is scope for new development. I have seen an estimate—I think it was published by AEAT—that there are some 60,000 tonnes of toxic munitions on the bed of the Baltic sea alone. I know that the company feels that it can become involved in the clearing up of chemical wastes, including chemical munitions. It is already involved in the removal of particulates from diesel exhausts, and that is bound to be a growing market. At the moment, quite rightly, there is much concern in the developed world, where we already enjoy a high material standard of living, that the drive to greater prosperity in the Pacific rim and Latin America will bring in its wake great environmental problems. But the peoples of those countries, as they achieve a higher material standard of living, will also want a better quality of life, and therefore there will be a demand from newly developing countries for environmental services of the sort that AEAT will have to offer. Again, that is not something for Governments to seek out. It is not for Governments to direct companies as to how they should find new business opportunities. That opportunity will come from boards and managers looking for customers wherever they can find them in different parts of the world.
Earlier we had an illustration of what my hon. Friend the Member for Wantage called the schizophrenia of the modern Labour party. On the one hand, the hon. Member for Ellesmere Port and Neston, the very image of new Labour, who took pride in saying that he had no fixed ideology and who I am sure sat up all last night committing to memory the new text of clause IV and would qualify as one of the pink guards of the cultural revolution going through the Labour party at the moment, admitted—I am sure that those on the Opposition Front Bench closed their ears at this moment—that at least he had seen the merits of greater private sector involvement in at least some areas of activity of the Office of Population Censuses and Surveys which had hitherto been entirely the property of the state sector.
Earlier the hon. Member for Kirkcaldy (Dr. Moonie) not only attacked the privatisation measures in the Bill but raised before us in a nostalgic vision a shade of Lord Kearton himself, harking back to the elysian days of 749 BNOC and a majority Government shareholding in BP. The hon. Gentleman is no longer with us. He has probably been summoned for a self-criticism session in Islington even as we speak.
Sometimes I wonder where Opposition Members have been. It is partly a question of Treasury rules; it is partly a fact of life that state-owned businesses are either given an unfair subsidy by the Government of the day—in effect, underwritten by the Government to the disadvantage of private sector competitors—or, as my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) pointed out, they are always last in the queue behind the politically attractive priorities of health, schools and pensions.
There is also the wider question of political interference. The hon. Member for Kirkcaldy was somewhat dismissive of BP. He said that it was fine when there was a majority state shareholding in it, but companies that have a state shareholding, particularly a majority one, are inevitably subject to the risk—
§ Mr. Miller
When was the last occasion that the President of the Board of Trade interfered in the running of BNFL?
§ Mr. Lidington
I am sure that my right hon. Friend will be prepared to answer that question if the hon. Gentleman wishes to put it to him. I do not think that the hon. Gentleman was listening to what I was saying. I was talking about the risk of political interference.
§ Mr. Mans
Does my hon. Friend agree that there has been a recent example of that, which the hon. Member for Ellesmere Port and Neston (Mr. Miller) clearly did not know about because he refused to answer the question that I put to him, and that is when the Central Statistical Office put BNFL accounts back into the public sector borrowing requirement.
§ Mr. Lidington
My hon. Friend puts his point well. The risk of political interference, whether it is to do with the siting of particular operations or investment decisions is there all the time, but so too is the risk of retaliation by a foreign Government that happens to disagree with the policies being pursued by the British Government of the day. It is impossible completely to insulate British companies from unjustified retaliation taken for political motives, but the risk is bound to be greater where a company is not seen to be based in a particular country and when the majority of its shares are owned by the Government with which the foreign Government is in dispute.
Through privatisation we shall ensure not just the survival of AEA Technology but the security of the jobs of those workers whose interests hon. Members on both sides of the House wish to protect today, and through privatisation we will ensure the developing prosperity of AEA Technology to the benefit of its employees and shareholders and of the nation.
§ Mr. Ken Purchase (Wolverhampton, North-East)
First, I pay tribute to previous speakers, particularly the hon. Member for Wantage (Mr. Jackson) who gave an 750 excellent resumé of the matter. If the Bill were not quite so spurious, it would have been a speech well worth hearing at another time.
I also pay tribute to the hon. Member for South Dorset (Mr. Bruce), who found himself with a somewhat ambivalent attitude towards the Bill. It is becoming clear why that should be so. The Bill is not about the science base or the development of technology but about finance and political expediency, and it is the worse for that.
Not that a Bill should necessarily be troubled by the juxtaposition of finance and politics. They are not mutually exclusive ideas. They are often important to the development of a Bill by which we intend to achieve a certain aim. In this instance, both those matters have been rushed and insufficient thought has been given to the Bill.
In support of my view that the Bill is neither about science nor about the development of technology but about finance and politics, I quote the evidence of the Institute of Professionals, Managers and Specialists to the Select Committee on Science and Technology on the proposed privatisation. It said:Firstly, it will remove from government a major pool of expertise on nuclear and other energy matters other than those related to decommissioning.Secondly, there is a risk of early business failure for the privatised part of AEA, which would cause extra cost and difficulty for the Government. This is because increasing profit projections for Commercial Division rely on exploitation of monopoly situations that currently exist, for example in the areas of decommissioning and waste management. Without the guarantee of long term Government contracts after flotation, the future of the Division would be at risk. In addition many of the potentially commercial activities assigned to the Commercial Division risk failure since they are based on synergies with part of Government Division that would no longer be available to them.I take that as an opening statement because it has a profound impact on the Bill.
The origins of the AEA, about which we heard much earlier, were in the depths of 1954 when, notwithstanding that a Conservative Government were in power, wiser counsels prevailed than today, when the Government are bent on unravelling the work which was put in place then and for which we have all had reason to be exceedingly grateful over many years.
My interest is clear. Hon. Members have been anxious to tell the House that they represent constituencies where activities related to the AEA are taking place, but I come from a west midlands seat, Wolverhampton, North-East, where we are totally dependent on the development of science, engineering and new technologies to earn our daily living. Without it, we will fade; indeed, we have already faded because of the underfunding of science, particularly "blue skies" science, and shortage of money for market opportunities.
Harold Macmillan was part of the Government in 1954, and subsequently became Prime Minister. When he retired from the House of Commons, he became a member of the other place. Speaking in his former constituency of Stockton, at a time of earlier privatisations, he used a phrase that is now embedded in the consciousness of the British public: he said that we were "selling the family silver". (Interruption.]If the hon. Member for Plymouth, Sutton (Mr. Streeter) wishes to intervene, he may. It is entirely a matter for him.
Although Harold Macmillan was referring to another privatisation at that time, his words are now etched in our consciousness, and we have reason to understand them 751 increasingly as each day passes—not least the recent fiascos involving the electricity industry. As I have said, however, wiser counsels prevailed in earlier days, and current developments are a travesty of what was then considered to be the right course for Britain to take.
In recent years, the AEA has deliberately separated its nuclear from its non-nuclear work in preparation for privatisation. Of course we knew that the separation was coming—it was almost a sucker punch—but it has happened by default none the less. AEA Technology has already divested itself of much of its work; much of it has been privatised. For some years, the management of the AEA have made no secret of their desire for the organisation to be privatised, but I wonder how much that has to do with the gravy train rather than what is good for the industry.
§ Mr. Ronnie Campbell
My hon. Friend is dealing with an important subject. I joked earlier about Homer Simpson and his power station, but let me point out in all sincerity that many nuclear disasters have taken place in America and Russia, including Three Mile Island and Chernobyl. The private sector may not be able to exercise the necessary controls. There are serious ecological considerations. Given the general fear of nuclear disasters and all the safety hazards, should we be pushing nuclear power into the private sector now? I think that there is a long way to go before we get this right.
§ Mr. Purchase
My hon. Friend has made a good point, although I did not realise that he was joking when he referred to the debacle surrounding the Simpsons. As he says, much of the delay involving the Bill—which, of course, is still not timely—is due to the complexity of the process of separating a unitary body into two parts, one of which is to be sold. We do not know the nature of that sale; we do not know what route the Government will take. There is a hole at the heart of the Bill, to which others have referred. Indeed, the Conservative Members to whom I referred earlier spoke at length about the problems involved in the type of sell-off that will ultimately take place. Only when those complex problems are disaggregated can the sale proceed.
As I have said, parts of the AEA have already been privatised. Job losses have continued—surprise, surprise. Have not job losses always been the prelude to the privatisation of every industry? The aim has been not necessarily to put the company concerned into a better state but to put it into a better state in which it can be sold. The state has already met the redundancy costs; price rises have been allowed beyond inflation; the pig has been fattened for sale. That is a simple, straightforward policy that we could all understand. I suspect that the current position is no different. The Government introduced the Bill because they failed to persuade the House and the country that they could privatise the Post Office: there can be no other reason.
§ Mr. Clifton-Brown
In the 1960s, the AEA's forerunner employed 40,000 people. The rundown in the number of employees happened long before the present privatisation—and, indeed, company splits took place then as well.
§ Mr. Purchase
The hon. Gentleman makes his point well. Of course that was a much larger organisation, Fitted for a very different time. We are now dealing with the short term, however, rather than the long term to which 752 the hon. Gentleman reasonably refers—and in the short term the Government are determined to bring a privatisation to fruition. They want the money, and we know why: according to the Financial Times, AEA Technology is valued at some £200 million, although that will depend on how the sale takes place. It also has a work force of some 4,000. Oddly enough, the organisation's sales also amount to around £200 million per annum. I readily concede that the position is now very different.
The proposal was inserted into the Queen's Speech at the 11th hour and the 59th minute, because the Government had lost what they regarded as the jewel in their crown—the sale of the Post Office. Having interviewed the chairman and chief executive of the Post Office in a Select Committee, I can tell the House that they are bitterly disappointed men—almost, but not quite, as disappointed as the President of the Board of Trade. Their opportunity to achieve millionaire status had been taken away at the last second. They have a right to be disappointed, but they do not have a right to our money.
§ Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)
Order. The hon. Gentleman should not go too far down that path. We are not discussing the privatisation of the Post Office; we are discussing the Atomic Energy Authority Bill.
§ Mr. Purchase
I accept your ruling, Mr. Deputy Speaker.
By modern standards, AEA Technology is quite a large company. Conservative Members have asked what Labour's policies are; I can tell them that our policy in regard to companies of this kind is to ensure that they prosper and contribute fully to the development of the British economy. We believe that AEA Technology could remain in the public sector and continue to make its contribution.
We heard earlier about the corset that Treasury rules tend to impose on opportunities for cash raising, but those arguments are spurious. It is within the gift of the Treasury and the Conservative party to change the rules if they so wish. They can do that at any time. The old arguments that we used to hear about public investment crowding out private investment have proven to be worthless. International capitalism is looking for a home for its money. [Interruption.] Who knows, the hon. Member for Wyre (Mr. Mans) may rise in a moment. Spring is arriving and the sap is rising too. I think that he is waiting for the opportunity.
The Government have the opportunity to change the rules, if they wish, in a satisfactory way. Money could be raised for this important enterprise, which belongs to the nation and is in democratic ownership. The benefits accrue to the nation. While it is in our control, we have the right to deal with it and to use it to benefit industry, commerce and every other sector that depends on the lifeblood of innovation and invention. Those are the stakes that we are discussing. I agree that this privatisation is not on the scale of the Post Office or water industry privatisations, but it is of that importance.
The Bill does not set up a new company which could then be sold off, with money being put into the Consolidated Fund. It talks about schemes. Other hon. Members have referred to the fact that the Bill offers no real understanding of just how the company will be privatised. We look forward to, and would welcome, an 753 answer on that. Unquestionably, the Committee's work will be hindered unless the basis on which the company will be privatised is understood.
After the schemes comes the possibility of disposals, which can take place without further reference to Parliament. Who knows, the companies or company, whichever it might be—we know not—could then be split into small parts. A typical trick employed in the market is to gather a company, to strip its assets and to sell it off.
§ Mr. Ronnie Campbell
I shall not talk about Homer Simpson again. My hon. Friend has got on to an important subject. In relation to the electricity industry, Trafalgar House has just tried to take Northern Electric to the cleaners. The regulator said he was having none of it. I wonder how that relates to the nuclear industry. Once it has been privatised, foreign companies might want to take its assets and use them in the same way as the Americans in "The Simpsons" on Sky Television.
§ Mr. Purchase
My hon. Friend makes a series of good points. I may have preferred them one at a time, but I had the lot together. We should especially recognise the real probability of AEA Technology, in whichever form it exists, being split up in the way that he suggests, and being owned by people who have no loyalty to this country. One must not think that they have that. We are patriots. Hon. Members in this Chamber believe that, first and foremost, we are interested in British interests. Of course we recognise that we cannot exist simply as an island in every sense of word. We must depend and co-operate worldwide; none the less, all our efforts should be directed towards the interests of the people whom we represent, no matter how much that depends on our international diplomacy and the work that we undertake.
Let me give a specific example to my hon. Friend of the way in which the Government have acted. I have mentioned the super-highway. I hope that you will allow me, Mr. Deputy Speaker, to proceed with that subject for a moment. The Government plan to allow the super-highway to be built by anyone except British Telecom and Mercury Communications. Their reason was that those two companies—
§ Mr. Deputy Speaker
Order. I am tolerant tonight—I have felt in that mood so far—but the hon. Gentleman promised earlier that he would discuss the Bill. I hope that he will now do so.
§ Mr. Purchase
I shall, of course, do as you wish, Mr. Deputy Speaker, but I owed a little debt to my hon. Friend the Member for Blyth Valley (Mr. Campbell), who had intervened. It may be inappropriate to talk about the way in which the super-highway has been constructed and about the fact that all the companies are American, but I am sure that you would let me make that point that the same thing could happen because of the Bill.
Under this measure, the technology, science, engineering and development sectors could end up in foreign hands. I do not say that as a xenophobe. Whatever the form of privatisation, it is important that we can keep control of what happens in the interests of the experienced, skilled and scientific employees in the industry.
754 You are not insisting, Mr. Deputy Speaker, that I should return to the Bill, but I do so voluntarily. It states:Clause 10 provides for a reduction in the minimum number of members of the Authority".It removes the requirement that a certain minimum number of members should have relevant experience. That speaks volumes. I am not privy to Government thinking, but the general public will think that that paves the way for yet more political appointees to yet another quango. If the need for technical and relevant expertise is removed, one must seriously probe and question the Government about what they have in mind in relationship to membership of the body. I say that without malice. I hope that the Minister will be able to assure us, and to tell us what he understands clause 10 to mean and what his intentions are. I am sure that they are honourable, but the House is entitled to know what is in his mind.
There are issues that must be dealt with. The principles that the Government have used are the usual ones about the need for organisations to have freedom to manage their own affairs and to make the most of commercial opportunities. That is a spurious argument. The company can do all of those things right now. It simply needs the Government to accept that it is possible and sensible to keep it in the public domain and, at the same time, to allow the desirable objectives that I have mentioned.
After any sale, the Government may be left with a part of AEA Technology that requires constant public funding over many years, certainly until the completion of the decommissioning of nuclear assets. It is reasonable for the state to recognise that complementary sectors exist in a unitary body. They are part of the same asset base. We can ensure that the total cost of the activities, especially of decommissioning, is partly offset by the profitable activity of another sector of the company. It is reasonable to keep that critical mass—a scientific term that has been ripped off by the business management community and is now part of its jargon. That critical mass is exceedingly important if the company is to remain as a unitary body rather than one that is divided and is, therefore, weaker.
I hear talk about the form that privatisation will take. Rather than take a single cash sum from the sale, which would then go into the Consolidated Fund, the revenue stream from AEA Technology should be used to continue to contribute towards, for instance, decommissioning costs. More than that, it could be used to reinvest and invest again in the development of research expertise in the nation's interests.
On technology transfer and innovation the Financial Times said:AEA contains a high class, probably unique, amalgam of expertise, which can be marketed to a wide range of companies.The value of this company is expressed almost exclusively through the people who work for it; unless the Government find a way to keep that body of people together, it will be a pig in a poke, it will be worthless. That has to be at the centre of our thinking.
The AEA is a flagship organisation. It plays a key role in United Kingdom technological development. We have already mentioned environmental technology, which is a growing area of concern the world over. The hon. Member for Brentford and Isleworth (Mr. Deva), who is no longer in his place, made a sensible intervention and talked about the need for decommissioning in the former Soviet Union countries and the safe disposal of the nuclear and hazardous waste that has accumulated over 755 many years. The whole aspect of environmental pollution controls is coming closer to the centre of the agenda for business development. In western Europe and north America the issue of emissions is critical to the future of the planet. Here we are with the opportunity to make a head start with this body, but we are throwing it away carelessly without thought for what will happen.
§ Mr. Ronnie Campbell
My mind is starting to boggle. My hon. Friend has been talking about the privatisation of the nuclear industry. Does he agree that the private sector is liable to take shortcuts on safety in the nuclear industry which would cause great danger to the areas in which the nuclear power stations are located? It will be frightening for those who live around them. Three Mile Island has already been mentioned and that is just one example. Is it not of great concern that the Government are not prepared to keep hold of the industry and develop it? Nobody is denying that the industry needs to be developed, but to give it away to private industry at this late stage is wrong.
§ Mr. Purchase
As ever, my hon. Friend has made a relevant intervention. That is another danger implicit in the Bill and it has been referred to by Conservative Members who have questioned whether the Treasury will relax the rules so that the company will be able to obtain the necessary investment.
One of the things that plagues the development of companies in this country is short-termism, which typifies so much of the work in the City and which has been to the detriment of our small, medium and even larger companies. Short-termism means that companies have to go to the market for money and have to show dividends that are out of kilter with the company's activities in order to satisfy their shareholders so that they will continue to hold the stock. That is a serious danger of privatising the AEA. Rather than an ordered, planned and proper approach to this important company, a scramble will take place and shares and the dividends paid upon them will become the only important matter. My hon. Friend the Member for Blyth Valley was right to make his point and I believe that it has been understood by many hon. Members.
The hole in the heart of the Bill is the form of sale. We must know what form it will take. The work of the Standing Committee will be in a vacuum. It cannot be constructive unless we have something around which we can discuss, probe and test in the best traditions of the Opposition. There are many Conservative Members who would want to know that before setting foot in the Committee.
I do not feel that it is necessary to rehearse again the arguments about pension rights, because there will be another opportunity to do that. However, it is important and my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) spoke about it at some length. Many trade unionists and ordinary workers will be concerned about the way in which employment rights are expressed in the Bill. The Transfer of Undertakings (Protection of Employment) Regulations 1981 apply to the employment rights and we hope that the Government will make it clear that they will honour those regulations properly.
This is a hasty and ill-thought-out Bill. It has no regard for the United Kingdom's science base. It is a hole in the heart and an example of political and financial expediency at its worst.
§ 8.5 pm
§ Mrs. Cheryl Gillan (Chesham and Amersham)
I extend a welcome to my hon. Friend the Under-Secretary. This is the first opportunity I have had to congratulate him on his new appointment. We served as officers on the Back-Bench Trade and Industry Committee for some time and I know that he brings to the House and the Department a wealth of knowledge and experience.
While there is another brief appearance of the hon. Member for Kirkcaldy (Dr. Moonie), I apologise for not being in the House during his opening speech. I had told him that I needed to be out of the Chamber at a Select Committee, but I should like to put on record the fact that I was extremely sad to have missed his contribution.
We have heard some interesting speeches and I congratulate my hon. Friends on the contributions that they have made. However, I must confess to being rather sad at the doom and gloom that has been echoed in all the speeches from Opposition Members. I had expected a welcome for the Bill, but the speeches have only made up in length for what they lack in depth.
The hon. Member for Ellesmere Port and Neston (Mr. Miller) said that he can see the site of AEA Technology from his bedroom window. However, I was left unsure as to whether he had actually visited the premises. No doubt he will let me know later. He can rest assured that, during the privatisation, from his bedroom window he will be able to look at a company being developed and set free from the shackles of Government. I am delighted to welcome this Bill, which is long overdue.
This is the first step towards releasing the remaining shackles that were imposed by the Treasury on a group of individuals whose talent and capabilities have grown out of the development of nuclear power. This privatisation will be the second successful operation to spin off from our original investment in the nuclear industry. The first was Amersham International, which I am sure that hon. Members know is based in my constituency. Amersham International has set a pace that I hope AEA Technology will match. Developing as they do from UKAEA, they both represent a commercial payback for this country from our investment in science and fundamental research.
Some of the speeches have left doubt in the minds of those outside who listen to these debates who may believe AEAT to be part of the nuclear power industry. AEA Technology is not a nuclear energy business, although it builds its expertise and reputation by servicing the nuclear industry, among others. Today, only about half AEA Technology's revenue comes from customers in the nuclear industry and it does not own any nuclear facilities or generate electricity. Some speeches have not made that absolutely clear. AEA Technology's own vision is to become a UK flagship science and engineering services business, creating a strong new British competitor in world markets and delivering—
§ Mr. Campbell
Can we take it as sure that that company will not be buying shares in the privatised nuclear industry?
§ Mrs. Gillan
I am not sure that I understand that intervention. As I did not hear or understand it, I think that I better pass over it. 757 I was saying that AEA Technology has a vision which I think that every hon. Member should endorse. It wants to be a flagship science and engineering services business, creating a strong, new British competitor in world markets and delivering a competitive edge to all its customers. I am sure that that stated aim is welcome.
Since privatisation in 1982, the business of the first flagship science company in this field, Amersham International, has grown more than sixfold. Its turnover has risen from £48.5 million in 1980, the year before privatisation, to £324.2 million last year and the company's profit before tax has grown even more significantly from £4.1 million to £43.5 million—almost 10-fold. I hope that hon. Members will listen to that and understand the success of Amersham International as proof that privatisation has truly worked.
§ Mr. Gary Streeter (Plymouth, Sutton)
Will my hon. Friend make sure that she has her facts entirely right? I recall that, in the early 1980s, Labour Members were moaning and groaning about the privatisation of Amersham International and suggesting that it was going to be a disaster. Can it really be such a success story in view of what Labour Members said 10 or 14 years ago?
§ Mrs. Gillan
I thank my hon. Friend for that intervention. Labour Members were opposed to the privatisation of Amersham International. I shall repeat its success. Amersham's turnover rose from £48.5 million in 1980 to £324.2 million last year.
From reports of his speech, I understand that the hon. Member for Kirkcaldy is especially concerned about the erosion of the science base and the reduction in the number of employees. Perhaps he would like to know that the number of staff of Amersham International has grown from some 2,000 employees in 1980-81 to just under 3,500 in 1993-94. The measure of Amersham International's success may be seen in the fact that more than half its staff are employed overseas, where it does almost 90 per cent. of its business, making the company one of the country's top overseas earners. It contributes more from overseas earnings than the whole of the rest of the British nuclear industry. The rigours of open international competition, when compared with the task of a public utility addressing a domestic market, makes that achievement even more remarkable.
Amersham International has founded its commercial success on applying its scientific and technical expertise in health care and fundamental research into the processes of life. The company's products have significantly enhanced the ability of the medical community worldwide to diagnose brain disease and heart disease and have brought relief to many thousands of sufferers of certain forms of cancer. Those applications provide the most dramatic evidence of the benefits of nuclear medicine arising from the application of very small amounts of short-lived radioactivity at molecular and cellular level. The nuclear industry is often seen as exclusively connected with power generation and, in earlier days, weapons. Amersham International's achievement should remind us that there is a third sector to the industry which has applied fundamental understanding of nuclear science to products and methodologies of outstanding social benefit and commercial success.
758 This sector of applying such fundamental skills is new and deserving of every encouragement from all hon. Members. We on the Conservative Benches have every confidence that AEA Technology will demonstrate the same success as Amersham International. I hope that Opposition Members will also demonstrate their confidence in AEA Technology to work more in industrial applications, but essentially to apply its depth of skill and expertise.
Privatisation will give AEA Technology a clear commercial remit and submit it to the discipline of the market place. To meet that challenge, it must be able to operate from a secure platform and in a predictable political and regulatory climate. As I have said in previous speeches on the subject, it will need to demonstrate to potential investors that the sector that it is joining is secure from maverick political pressure, which may affect lines of supply, freedom of international trade, and the ability to attract investment and secure publicly acceptable disposal routes for waste. The Government are currently reviewing many of those areas, as hon. Members have said. I see this as an opportunity to ensure that Amersham International and the newly privatised AEA Technology are founded in an atmosphere not of over-regulation but of cautious regulation.
I am fortunate enough, unlike the hon. Member for Ellesmere Port and Neston, who can only see it from his bedroom window, to have visited AEA Technology in the past year to see at first hand some of its work. Its existing worldwide markets are very impressive and we have heard a long list of what they cover, including aerospace, defence, electricity, health and safety, the oil and gas industry, the pharmaceutical industry and research laboratories. Indeed, its skills base is almost as impressive as the markets that it serves and I shall highlight some of the projects in which it has been involved to show the variety of the organisation.
AEA Technology is often the first port of call for expertise in a crisis. When the oil tanker the MV Braer broke up on the coast of the Shetland islands, AEA Technology teams were called in to advise on oil spillage control and the use of dispersants. Local authorities frequently turn to AEA Technology to support fire and other emergency services at major accidents involving toxic chemicals or hazardous cargoes. It was perhaps not highlighted enough, but following the Piper Alpha accident in the North sea, AEA Technology became the leading consultancy contractor in helping offshore operators with health and safety. It quickly saw a market and set up a company in the Netherlands to serve the Dutch sector, where, incidentally, it now leads the field.
Safety, economy and environmental impact studies are also in the company's remit. Several major safety assessment studies have been carried out for London Underground and British Rail, including a project which is of particular importance to my constituency, the crossrail project. I very much hope, on behalf of my constituents in Chesham and Amersham, that crossrail will not be another project that is consigned to the dustbin of history and that we shall press forward with it as soon as possible.
I have been reading AEA Technology's research highlights and it appears that diamonds are not just a girl's best friend, but have been used in some of the company's front-edge technology and research and development work. The surface sciences and the diamond-like carbon 759 coatings give a tremendous performance showing an order of magnitude less wear. That technology is o f special significance to hip replacements.
§ Mrs. Gillan
I see that the hon. Gentleman is familiar with that exciting innovation. It will alleviate much pain and suffering.
AEA Technology has also reacted well to international markets. As we have heard, it has extensive offices in the United States, Slovakia, Korea, Belgium, the Czech Republic, Hungary and Japan. Indeed, two employees were seconded to Japan to Dodwell and Co., under the excellent "Engineers to Japan" scheme. The scheme has been much understated. It is funded by the Department of Trade and Industry and administered by the Royal Academy of Engineering. The DTI funds up to 50 per cent. of the total cost of secondment up to a maximum of £35,000. AEA Technology and two of its employees have taken full advantage of the scheme. They have made significant breakthroughs and they have improved contacts and sales in the Japanese market.
The international dimension of AEA's business leads me naturally on to space, an area in which, as my hon. Friend the Under-Secretary of State for Industry and Energy, the Member for Hertfordshire, South-West (Mr. Page), appreciates, I take a particular interest. Space is an area of increasing international co-operation. It is, perhaps, not surprising that AEA Technology can make an important contribution to space technology as both nuclear and space activities take place in a hostile environment involving radiation problems. While on the subject of space, we can see plenty of space on the Opposition Benches at the moment.
Since 1972, AEA's European space tribology laboratory at Risley has been the European. Space Agency's laboratory for friction, wear and lubrication problems, serving all space industries in Europe. It has an unrivalled reputation as a centre of excellence for its capabilities, services and products. Similarly, the nuclear fusion work carried out at the Culham laboratory has established a leading expertise in radio frequencies and particle beam technology. Those capabilities are being used for spacecraft antennae and for the development of the next generation of environmental and earth observation satellites.
The AEA Technology portfolio ranges from research and development and consultancy right through to the manufacture of flight hardware and the provision of testing facilities for industry. Its customer base here is both civil and military. It has customers not only in the United Kingdom, but in Europe and elsewhere. Its customers include NASA—the National Aeronautics and Space Administration—the Department of Defense and United States aerospace companies.
We should all support international co-operation in space, not least today when, following in the footsteps of our own astronaut Helen Sharman who went to the Russian space station Mir, we have seen the successful launch of the 18th mission to Mir, carrying for the first time an American astronaut who will spend three months on the station.
All United Kingdom space industries are in the private sector. Surely it is appropriate that the capabilities of AEA Technology should join them.
760 I intervened earlier to speak about the growing reputation of AEA Technology and about the fact that there are demands for its privatisation from another source. AEA Technology employed MORI to research customer attitudes. The findings were extremely positive. First, MORI found that AEA Technology was the highest-rated company in its sector. Secondly, 84 per cent. of customers welcomed privatisation. Thirdly, more than 58 per cent. thought that it would improve the service. An overwhelming majority of customers think that AEA Technology performs at least as well as its main competitors.
§ Dr. Moonie
I have listened to the hon. Lady's speech with great interest. Does she place the same cachet on the latest MORI poll which shows the Labour party on 58 per cent. and her own party on 20 per cent.?
§ Mrs. Gillan
I rely on your good taste and advice on every occasion, Mr. Deputy Speaker. I shall treat that intervention with the response that it deserves—silence.
Much has been made by Opposition Members of the position of employees. The impression has been given that we care not for employees or staff—or the workers, as one of my hon. Friends called the people who are employed at AEA Technology. AEA Technology not only recognises the quality and commitment of its staff, but realises that the staff are one of its greatest assets. The terms and conditions of employment will be safeguarded under the TUPE—Transfer of Undertakings (Protection of Employment) Regulations 1981—which means that the staff will transfer with their current pay and conditions, and that redundancy rights will be protected.
The Bill places a duty on the Secretary of State and on AEA to ensure that employees can join a pension scheme on privatisation which, taken as a whole, is no less favourable than the AEA scheme. Employees will be free to leave any accrued rights in the AEA pension scheme. They will, therefore, continue to benefit from the full index-linked pension. Existing pensioners and the pensions of staff who remain in the AEA will not be affected. That is my understanding and I believe that it is also the understanding of AEA Technology.
As for employee participation, although it is the decision of the Department of Trade and Industry, it will be AEA Technology's policy to seek to maximise initial and subsequent employee share ownership in the company after privatisation, including encouraging every employee to own at least a minimum number of shares, by operating a share option scheme that is equitable on the basis of length of service, contribution to the business and personal productivity. A committee will be formed to advise on extending employee share ownership. It will publish at the time of the annual report a full list of the number of shares and the number of options owned by every director. That is an excellent commitment.
I was delighted when my Government put their money where their mouth was and created the Office of Public Service and Science. We have heard from the lion. Member for Ellesmere Port and Neston and I hope that we shall soon here from the hon. Member for Cambridge (Mrs. Campbell). Like me, they are members of the Select Committee on Science and Technology. During our first year, we looked at the White Paper "Realising our 761 Potential" and at the crucial signpost from that White Paper, the foresight programme. One of the programme's aims was to help the business community to secure the maximum benefit from science and technology while continuing to support excellence in research.
These steps towards liberating AEA Technology should be widely welcomed by politicians, by business men and by our community of scientists, as I know they are by AEA Technology. The Bill fulfils one of the aims set out originally in "Realising our Potential". I have no hesitation, therefore, in commending the Bill to the House.
§ Mrs. Anne Campbell (Cambridge)
I apologise for my late arrival; I was unavoidably detained outside the House. I am afraid that I missed the Minister's speech, for which I apologise.
I am one of the many Labour Members who believe that power, wealth and opportunity should be in the hands of the many and not the few. One of the reasons why many of us oppose these privatisations is that we sincerely believe that that is a fundamental belief of the Labour party. I hope that we shall soon see that belief officially written into our constitution.
I intervened earlier to comment on the complete lack of a Government energy policy. I was glad that my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) agreed with me on that occasion. I should also draw attention to the complete lack of Government policy on public sector research establishments. The Government have not even begun to try to answer very important questions such as what the establishments are for, what their role is and what they are expected to do that the private sector cannot achieve. Instead, the Government have progressed with a policy that has involved privatisation, stripping the establishments down, selling them off and generally debilitating and rationalising them in a way that has been extremely damaging.
The issue was first pointed out in the science White Paper, "Realising our potential". It is an important indicator of the way in which the Government have subsequently behaved. The White Paper says:The Government believes that many of the services currently provided by its research establishments could be carried out in the private sector, and that privatisation is a realistic prospect for a number of establishments. However, there are other establishments for which privatisation is not currently a realistic option. Where establishments are to remain, for the time being, in the public sector, the Government will ensure that customers are provided with a high-quality service in a way that represents best value for money. Careful consideration will need to be given to holding the level of any such capacity to the minimum necessary to meet Government's statutory responsibilities and other essential requirements.
Since then, there have been several reviews. The DTI has suggested that several of its laboratories be privatised. There has also been the Government's efficiency scrutiny of the public sector research establishments, which was supposed to examine those establishments and find out whether any were suitable for privatisation. The recommendations were published, but so far the Government have not said whether they will accept them. We have been waiting a long time, and I suspect that the report will be quietly dropped because of the hostile 762 reaction not only of the House of Commons Select Committee but of the House of Lords Select Committee and of other respected bodies such as the Royal Society.
My hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) told the House earlier why AEA privatisation had cropped up at this particular time. Many outside observers were greatly surprised that it was mentioned in the Queen's Speech last November, but it was obvious to the Opposition why that happened. The Government needed a last-minute suggestion because the Labour party ran a successful campaign against Post Office privatisation and so they could not proceed with that. I shall not pursue that point, Mr. Deputy Speaker, as I know that you will rightly stop me if I try, but it is worth pointing out that that is the only reason why AEA privatisation is before us now.
The hon. Member for South Dorset (Mr. Bruce) said that he had a constituency interest, and expressed concern about the employment opportunities for the people who work for AEA Technology. Indeed, when the Government published the preview to the efficiency scrutiny of the public sector research establishments AEAT employed 7,000 people, but today that number has fallen to 4,100. In the run-up to privatisation there has been a vast rationalisation and a great reduction in staff numbers, and I understand that AEA plans to cut its staff even further, by one sixth, after privatisation.
Some of my hon. Friends may be rather disappointed that the redrafted clause IV of the Labour party's constitution does not mention full employment, but it does refer to giving people the opportunity to work. Clearly Conservative Members do not believe in that. Time and again, staff numbers are reduced and jobs lost, and people with great expertise and skills find that those qualities are no longer valued or used in the public sector. One could describe the Government philosophy as, "Strip it down, sack most of the staff, then sell it off"—and that epitomises exactly what is happening to AEAT. The civil service union, the Institution of Professionals, Managers and Specialists, has said that the only way in which the Government can increase profits at speed is to sack the people who have made the business successful. That is precisely what is happening at AEAT.
Hon. Members on both sides of the House have described at length what AEAT is all about, and I do not intend to repeat what they have said, but it is worth pointing out that it was set up under the Atomic Energy Authority Act 1954 to
produce, use and dispose of atomic energy and carry out research into any matters connected therewith".In recent years, in preparation for privatisation, the nuclear and the non-nuclear work have been separated and three divisions have been created—AEA Technology, the UKAEA Government division, which manages the AEA's nuclear liabilities, and the services division, which is being contracted out to the private sector.
If AEA Technology is privatised it will be one of the largest private sector engineering and science consultancies not just in this country but in the world. I want to talk about its previous history, especially the merger with the Warren Spring laboratory, which became part of the national environmental technology centre, which is now part of AEAT.
My hon. Friend the Member for Ellesmere Port and Neston was asked several times whether he had visited a laboratory. I visit as many Government laboratories as I 763 can, and I spend much time visiting science and technology organisations and institutions not only in my constituency but in other parts of the country. However, when my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) and I wished to visit Warren Spring laboratory before it was closed we were firmly given the thumbs down by the President of the Board of Trade, who refused to allow us to visit it unless we were accompanied by a Minister. It proved difficult to find a time when a Minister could visit the laboratory at the same time as my hon. Friend and myself, and in the end we could not make the visit. I have deeply regretted that ever since, as the visit would have been most interesting and would have helped us to understand the situation. I hope that Members on both sides of the House will deprecate the fact that Opposition Members were prevented from finding out about and visiting Government laboratories.
Only about half the Warren Spring staff moved to AEAT, a few moved to other posts in the DTI, and the rest took voluntary or compulsory redundancy. That is a pity, because a great deal of valuable environment-related work has been lost, and the expertise has probably been lost for ever. I know at first hand how valuable that work was, because Warren Spring was one of the main laboratories which analysed the samples taken in my constituency by Cambridge city council to monitor air pollution and established that Cambridge is one of the most heavily polluted cities in the country due to the effects of traffic. I am therefore well aware of the valuable work done by staff at the Warren Spring laboratory, and I hope that it is being continued, at least in part, by the staff at AEAT.
There has been a rundown of the work done by AEA Technology. I would regard the AEA as being very valuable as a technology transfer organisation. The Select Committee on Science and Technology said that it was crucial to our national economic prosperity that the science base and the work done by universities and other institutions should be transferred into manufacturing technology. That is one of the most important purposes of public sector research establishments such as the AEA, which have direct contact with industry. The AEA provides a valuable consultancy service and is able to offer technical assistance regarding the research carried on in other institutions. That research can be passed to industrial applications to ensure that they take full advantage of it.
In earlier days, research associations provided that valuable role with a large element of Government funding. Since that Government funding disappeared, a lot of the research associations have diminished in size and reduced in effectiveness, and we are left with a small number of establishments such as AEA Technology which play a valuable role. That is different from the situation in Germany, where the Fraunhofer institutes play an extremely important part in transferring basic science and technology expertise to the industrial sector. That explains why Germany is so much more successful than the UK in manufacturing and production.
It is worth reviewing what will be lost following this privatisation. Jobs will be lost, including the jobs of people who have skill and expertise beyond the norm in this country and who have been trained at great expense by the state in science and technology. They have skills which we are supposed to value. We tell young people to study science and technology to help them get a job more 764 easily; yet time and again people with valuable science and technology skills are made redundant, sometimes in their late 40s or early 50s when they have little chance of getting other jobs.
We are also losing the important base for Government research and development. That is not a one-off; it is part of a continuing trend. Statistics in the forward look statistical supplement published last year show that between 1986 and the projected spending for 1996 Government Departments will have reduced their research and development expenditure by a massive 46.7 per cent. The Ministry of Defence has had its research and development expenditure reduced during that period by 34.4 per cent. I do not particularly object to defence expenditure being reduced, as the end of the cold war has meant that we are living in a much more stable environment, but the fact that that money is not being transferred to civil research and development is a disgrace and the Government should be ashamed of that.
We are losing jobs and the important base for Government research development. We are also losing the supply of people into Government policy making. When one looks at the profiles of Government Departments, it is quite worrying that there are few scientists in the higher grades. The only places from which scientists can come are the Government research establishments, as they find their way to the top of those organisations and then into Departments. They can then become practising scientists and intelligent customers with real scientific expertise. In the Department of Trade and Industry, for example, those in grades 1 to 3 make up a total of 70 staff, of whom only nine have science and technology qualifications. In the same grades in all Government Departments the total staff is 737, of whom only 59 have science and technology qualifications. That situation is not tolerated in other countries, which expect people involved in policy making to have science and technology qualifications. Our approach leads to poorer quality decision making by Government, and we should redress that.
We shall also lose the Government's resource to provide expertise at times of national emergency, and also the retention of expertise. Once AEA Technology is privatised, there is no guarantee that that expertise will remain available to the Government. The expertise may not remain as a single body, and it may split up in a way which makes it inaccessible.
A great deal of senior management time will also be lost, as indeed is happening already. What has happened during the past couple of years—and will happen in the next couple of years—is that instead of getting on with the job of making AEA Technology into a thriving organisation the senior management of AEAT will he spending their time in a diversionary way. They will he looking at how to privatise, how to arrange the rest of the organisation and how to improve staff morale and little effort will go into the actual running of the organisation.
The philosophy in relation to this privatisation should be, "If it's not broke, don't mend it." If there are no clear benefits, we should not proceed with the privatisation. The only clear benefit that I can see is that it will raise revenue for the Government. There will be a continuation 765 of the run-down in DTI research and development, which has been reduced by between £200 million and £300 million between 1985 and 1994.
The Government have not treated the safeguarding of the nation's knowledge base with respect, and this privatisation is another indication of the rather bizarre way in which they are discarding the nation's expertise. The stability of the work force will be lost as replacement of long-term research with short-term contracts will result from the commercial pressures to which this organisation will be subject. It is a sad commentary on the research and development industry in the United Kingdom that we so often find that long-term research is going out of the window, to be replaced by very short-term contracts which make it difficult to plan for the future.
A more important question is why the privatisation is being undertaken at this particular time. The Government have given themselves the tools and the procedures with which to plan much more effectively what happens to our public sector research establishments. We have a combination of two procedures. One is the forward look and the other is the technology foresight programme. They can be used as a means to identify overlap and encourage change without undue disruption. We should examine the scientific capabilities of the entire country and assess the research that we need to carry out to ensure our prosperity and quality of life into the future. We should use forward look and technology foresight to identify the areas in which rationalisation is possible. We should examine the scientific capabilities that we need to carry out research on topics identified by technology foresight.
The technology foresight programme has been running for more than 12 months now. Some recommendations from it have been carried forward into the science spending statement made by the Minister recently. We have not seen a full-scale publication of the technology foresight exercise which will identify the factors that I have outlined. I am therefore curious to know why the Government have decided to jump the gun and proceed with the privatisation of AEA at this particular time. The science and technology base is undergoing rational change and the Office of Science and Technology in particular should use the new tools available to it and not proceed in an ad hoc manner but implement change in a much more orderly way.
I draw to a conclusion by quoting the president of the Royal Society, who stated recently:we should remind ourselves that many of these"—he was talking about the services provided by the public sector research establishments—were taken over by the state because (as perceived by the electorate at that time) the privately run services were inadequate or unsatisfactory. The arguments in favour would have varied but would have included the advantage of unification, public safety and long-term planning.That is worth bearing in mind as we may find ourselves facing a similar situation in the future. Much of the work would then have been seen to be unnecessary.
766 It is also worth quoting an editorial in the Financial Times. Even though it was in favour of privatisation, it had the following to say:The ideal solution must be a management buy-out. This would create a sense of partnership among the company's employees and guarantee the AEA the independence to underpin its credibility as a consultancy.The alternative would be flotation as a private company. This would not be easy, however, since investors would have to ensure that the AEA had a worthwhile portfolio of contracts, and that its principal assets—people—would not walk out of the door.Only as a last resort should the Government consider the remaining option: sale in whole or in part to trade purchasers. This would be highly unsatisfactory. The AEA would lose its independence and, if broken up, its range of skills as well.That was a comment from someone who favoured privatisation, but I would say that there is one alternative open: not to proceed with privatisation at all.
§ Mr. Keith Mans (Wyre)
I am grateful for the opportunity to say just a few words in this Second Reading debate. I associate myself with the remarks made by my hon. Friend the Member for Wantage (Mr. Jackson). He made a masterly presentation of what has been right and wrong in the nuclear industry and in particular in AEA in the past 20 or 30 years. His speech also demonstrated the right way ahead for AEA Technology.
It is worth contrasting my hon. Friend's speech with that of the hon. Member for Caithness and Sutherland (Mr. Maclennan), who seemed to think that nothing right could possibly happen. He simply dwelt on what were in many ways the false trails along which technology and the nuclear industry were led in past years.
The speech of the hon. Member for Ellesmere Port and Neston (Mr. Miller) showed up clearly the shambles of the Opposition's policy on nuclear energy. Until recently, it was clear that the policy was to shut down as many power stations as possible as quickly as possible. It is strange that all Opposition Members who have spoken tonight referred to the damage that would be done to our nuclear industry and more specifically to AEA if it went into the private sector, when but a few months if not a few years ago the industry would not have existed as we know it today if the Labour party had been in government. Labour Members are not in a responsible position to comment on what the Government want to do with this part of the nuclear industry.
It is worth noting the change that has occurred in the nuclear industry in the past eight to 10 years. There is little doubt in my mind that until 1980 or 1982 it was a high-cost industry. Indeed, it would be true to say that it did not even know what its costs were. It was driven by all the bureaucratic devices that have been mentioned. The way in which it has been transformed is a tribute to it. It operates in the much more commercial climate that has resulted from the vast majority of the electricity industry being in the private sector.
I should go further than that. I cannot see that Nuclear Electric, even though it is still in the public sector, would have achieved greater efficiency if the other two power companies had not already been privatised. That acted as a spur. As a result, Nuclear Electric was forced to compete. There is now a transparency of costs that did 767 not exist before and greater efficiency, with more generation of electricity by the nuclear industry than ever before.
I sincerely hope that we will have the results of the nuclear review sooner rather than later and that those results will acknowledge the fact that at present we have a most unlevel playing field for the generation of electricity. The nuclear industry rightly has safeguards far in advance of any other safeguards in the rest of the electricity generating industry. I hope that the Minister, who is in his place, will take note of the fact that people—especially those, such as myself, in the north-west—would think it wrong if part of Nuclear Electric were given to Scottish Nuclear Ltd. as a way of making the privatisation of that part of the generation of nuclear energy more equitable. That would be the wrong way forward. I think that I speak for all Members in Lancashire when I say that it would not be considered to be the right way of proceeding.
The efficiencies that have been evident in the generating part of the nuclear industry have also been shown, more recently, in AEA Technology. There is little doubt that, as a result of what the Government have done in the past few years, that part of the industry has become more competitive and more commercially minded.
What can happen in that part of the industry was demonstrated by the first privatisation—that of Amersham International. My hon. Friend the Member for Chesham and Amersham (Mrs. Gillan) clearly showed how the privatisation of a small company, as it then was, whose products were held in high regard and which had a great deal of technical expertise, provided that it is managed properly, can increase not only profits but jobs—by 50 per cent. That must be the way in which hon. Members on both sides of the House wish AEA Technology to progress.
I cannot envisage that happening in the public sector. I cannot envisage the constraints imposed by the Treasury and the bureaucratic environment in the public sector allowing AEA Technology to realise its full potential as a group, bringing to the market unique skills in many different areas, such as product enhancement, plant and safety performance and environmental matters.
I agree with my hon. Friend the Member for Wantage about the way in which the company should be privatised. I urge my hon. Friend the Minister for Energy and Industry to ensure that AEA Technology is put into the private sector as an entity in its own right and not split up. I suggest that he considers closely the success of the Water Research Council, which was very much the research arm of the water industry in the public sector and which has been placed in the private sector so successfully. It now not only works for water companies but has developed a considerable expertise abroad and is expanding quickly.
Privatisation also demonstrates the use of devices that allow the maximum amount of share ownership among employees. Many hon. Friends know that I feel that we have not taken enough advantage of that aspect of the privatisation of public companies. AEA Technology offers us the opportunity to ensure that many, if not all, its employees become shareholders in the company. If we do that, there is a much better chance of the company being able to prosper in the private sector, just as the WRC has prospered.
768 Privatisation should have occurred before now. I understand the difficulties associated with separating the different parts of what was the Atomic Energy Authority from one another, but now we definitely have a company in the public sector that is ripe to enter the private sector as one entity. If it does, there will be a much larger repeat of the success that Amersham International had more than a decade ago.
§ 9.2 pm
§ Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)
We have had some thoughtful and informed speeches from Conservative Members and some exceptionally long speeches from very few Members of the Opposition.
§ Mr. Clifton-Brown
That is not true.
The Opposition said that the Atomic Energy Authority was a last-minute inclusion in the Queen's Speech. The hon. Member for Ellesmere Port and Neston (Mr. Miller) called it a rushed privatisation. In fact, the Minister, my right hon. Friend the Member for Enfield, North (Mr. Eggar), announced in a written answer, as long ago as 17 February 1994, that:the business activities in the AEA's new commercial division are capable of privatisation".—[Official Report, 17 February 1994; Vol. 237, c. 923.]That was about eight months before the Queen's Speech—hardly a rushed inclusion.
Predictably, the Bill's publication on 2 March 1995 was greeted with hostility, especially by the right hon. Member for Copeland (Dr. Cunningham), the Opposition Front-Bench spokesman, and by the Institution of Professionals, Managers and Specialists.
Many speeches this evening have mentioned the fact that the United Kingdom Atomic Energy Authority has been split in two. AEA Technology comprises a large range of nuclear and non-nuclear consultancies and research services, and that part of the business will be privatised under the legislation. The Government will retain AEA Government division, which will remain in public hands to oversee the substantial task of decommissioning the authority's many nuclear sites, including the Magnox power stations. AEA Technology is likely to be a £250 million business, capable of generating profits of £10 million next year and £20 million the year after. Its turnover could double in five or six years.
Mention has been made of the some 4,000 employees of AEA Technology. The hon. Member for Wolverhampton, South-East referred to the rundown in the number of employees. However, in the 1960s the business employed 16,000 people, so one could hardly claim that there has been a rundown in staff numbers recently to facilitate privatisation.
Half the 4,000 employees are scientists and engineers and their conditions of service must be a priority. Concerns have been expressed about their service conditions. Of course, they will be subject to the TUPE regulations, which means that their future conditions of service will he broadly the same as their existing conditions in AEA Technology. Schedule 3 deals with transferred pension rights which are modelled on previous privatisations. 769 AEA Technology has four nuclear and five industrial businesses. It delivers innovative technology and services to more than 2,000 organisations, many of which are household names and leading blue-chip companies. Although the United Kingdom and Europe constitute the company's largest market sectors, it is rapidly expanding into the United States of America, south-east Asia and 70 countries worldwide. That rate of diversification will be beneficial not only for the company but for its employees in giving the company a firmer foundation on which to base its future operations.
Hon. Members have referred to the activities of AEA. It delivers a huge range of services and technologies. It has developed a system to test aircraft carbon fibre propellers, in which a company in my constituency, Doughty Air Propellers, has an interest. AEA Technology has been instrumental in helping Airbus Industries in Toulouse—which I was fortunate enough to visit during the summer—to produce a test so that the structure of the carbon fibre on aircraft wings can be verified and any deterioration discovered quickly.
AEA Technology is also involved in a number of environmental technologies which have been mentioned tonight. For instance, it participates in the European Space Agency's ENVISAT satellite environmental testing system, which is at the forefront of our space and science technology. No nuclear-powered submarine can go to sea without first having an AEA test.
The company is involved in a number of other industries, including the electricity industry. It promotes energy efficiency, which will be extremely important if we are to meet our Rio target of stabilising CO2 emissions at 1990 levels by the year 2000. It has been involved in promoting and producing the lithium-ion cathode battery technology, which is now in use worldwide thanks to a licensing agreement with Sony Technology.
AEA Technology is a world-beating company. Hon. Members have mentioned the fact that the company helps foreign Governments and they have referred to its partnership with the Ukraine Government in helping with the Chernobyl disaster clean-up. That has been accomplished partly through direct tender for contracts and partly through European Union funding.
Why should we consider privatising the company? Before Opposition Members laugh at that suggestion they should recall that it was Labour's Minister of Power, Fred Lee, who in 1965 promised an expectant nation that we would capture all the export markets of the world if we were to mass build all of his new advanced gas-cooled reactors. We all know what a disaster that decision was for the nuclear industry. It has taken 30 years to get over the problem of those advanced cooled gas reactors and it will take another 30 years and billions of pounds to decommission them.
Not only Fred Lee was involved in that programme; the right hon. Member for Chesterfield (Mr. Benn) was involved in promoting the programme. If those strategic decisions had been taken not by the political Freds and Tonys but by the private sector we would not have had such disastrous results and the nuclear industries would not have had to recover from those decisions ever since. It was not until recently—until Sizewell B came on stream, not only early on the contract time but below budget, and until the Government had the courage to make 770 a major strategic decision to adopt a wholly new technology—that we returned to the forefront of nuclear technology in the world.
The importance of that decision was that 70 smaller companies were involved in the building and commissioning of Sizewell B, the major one of which was AEA. It will benefit from having gained expertise at Sizewell and will adopt that expertise in the emerging market for pressurised water reactors throughout the world. That will give it a great leg up in nuclear technology.
The hon. Member for Wolverhampton, South-East asked why it was necessary to privatise the company. As I pointed out to him, public companies operating in the public sector with Treasury rules and the external finance limit that they have to meet simply become starved of investment. We saw it with virtually every industry in the public sector. British Steel was losing £500,000 a week in the public sector; now it is the most efficient steel producing company in the world.
§ Mr. Purchase
May I correct the hon. Gentleman and remind him that I represent Wolverhampton, North-East, although I am proud of my hon. Friend the Member for Wolverhampton, South-East (Mr. Turner)? Does the hon. Gentleman recognise that the external finance limit and the rules imposed upon those companies can be changed? They are not God-given and the tremendous success that he has mentioned has been underpinned by the very rules that he now criticises.
§ Mr. Clifton-Brown
I bowled the hon. Gentleman a googly and now he has come back with a leg break. I mentioned the simple answer in an earlier intervention. If the assets—particularly the loans—of any organisation are accountable to the Treasury, of course the Treasury has to set proper financial directions for that organisation. Opposition Members would be first to criticise us if the Treasury were to allow any organisation to operate at a loss for any length of time. Therefore, proper external finance limits, financial guidance and, indeed, administrative guidance have to be given to every organisation in the public sector, and AEA Technology is not immune from that process.
Opposition Members would be the first to criticise us if we set a nil external finance limit for any of the organisations that have had substantial injections of public funds. That would be no way for a responsible Government to organise their affairs. Therefore, anyone who says that any company can operate as a quasi public sector company but with no external finance limit is not living in the real world. In my view, the only alternative is to have a fully public sector company to which the full rigours of the market do not apply, or to allow the full rigours of the market to apply, in which case all the benefits of the private market will apply.
What are those benefits? Private companies have innovation and the incentive to make a profit. Profit is a dirty word for the Opposition, but profit must be made before there can be reinvestment. Without that, the company cannot invest in new markets, find new technologies and produce new inventions as I have already suggested AEA should do and has the capability of doing. Like British Gas, British Steel and British Telecom, it can become a world-beating company. I want it to become a household name. I want its workers to benefit because they will have secure jobs that are well 771 paid. I want its shareholders to benefit through increased dividends. Above all, I want the country to benefit because the company will pay increased corporation tax as a result of making a profit.
This virtuous cycle of privatisation has been recognised throughout the world, but still the Labour party cannot recognise it.
§ Mr. John Battle (Leeds, West)
I congratulate and welcome the new Under-Secretary of State for Industry and Energy who, I gather, will make his debut at the Dispatch Box when he winds up the debate. I look forward to hearing his response to the serious questions that have been raised about the Bill by hon. Members on both sides of the House and hope that he will provide some answers.
The Bill is a space filler in the Government's rather thin programme, and its intention is to atomise AEA Technology. The chairman of AEA Technology, Sir Anthony Cleaver, suggested one reason why the company might not be attractive to potential private sector investors. He was reported in The Observer of 24 April as saying:The real problem for the City is to understand what we do.I hope that, as a result of this debate, people will be better informed. It has been a well-informed debate and all hon. Members have spoken of contacts, and the work of AEA Technology has reached almost every constituency of every hon. Member who has contributed to the debate.
AEA Technology is the world's largest engineering and science consultancy and it is precisely because it is of such quality that we oppose its fragmentation In this manner. UKAEA's annual review for 1993-94 praises a Government Department in a way that they are rarely praised these days, and we endorse that praise. It says:AEA Technology's vision is to become a flagship science and engineering services business working in partnership with a broad range of customers world wide to improve their competitive edge.Our unique wide-skills base, built up from working at the leading edge of science and technology for over 40 years, is focused on providing integrated solutions in the closely related fields of plant and process performance, safety and environment.
I stress the words "unique wide-skills base", "leading edge" and "built up over 40 years". AEA Technology takes a diverse, yet integrated, approach. Why, then, should the Government dismantle it in this way? The company's scientists are technically the best in the world.
Interestingly, the hon. Member for South Dorset (Mr. Bruce), who is no longer present in the Chamber, expressed his fears that this could be another Government redundancy programme in the public sector. He also seriously queried the shifting of decommissioning responsibilities in UKAEA and AEA Technology simply to move it around in order later to break it up. The Minister for Energy and Industry did not answer the questions in his earlier presentation, and I hope that we shall hear some answers in the winding-up speech.
The hon. Member for South Dorset said that he suspected a sub-plot. Opposition Members, too, believe that there is a sub-plot. AEA Technology already engages in international science and engineering activity. It has not, as some Conservative Members suggest, been stopped in its tracks. On the contrary, it is making huge strides, which is the whole point. The Science and 772 Technology Act 1965 contained a section that extended the AEA's research functions and allowed it to carry out non-nuclear research and development under contract for its customers. It could be argued that the AEA does not need the Bill to enable it to extend its functions and develop, as it can recoup its investment in licence agreements and the rest. Again, the annual report states:AEA Technology can solve many problems better and more effectively than those who depend on bringing together a number of small companies, each with a narrow field of expertise. AEA Technology's major customers frequently draw on the skills of more than one operating division.
As my hon. Friend the Member for Kirkcaldy (Dr. Moonie) spelt out in his speech, the seamless activity within the organisation is its unique property, its greatest asset. There is space for lateral thinking, for research boundaries to be crossed, to create space for new development and new ideas, to integrate experience and expertise. There has been more than 40 years of experimental research, and a whole range of spin-offs from that primary nuclear research has developed in recent years, and we have heard about many tonight. In health, they include developments in carbon fibre hips and in laparoscopes for keyhole surgery. There have been developments in propulsion units for satellites. There have even been developments to protect aircraft from lightning strikes. In electronics, there have been developments in hybrid integrated circuit packaging, which is now making a major low-cost contribution. There have even been measures to deal with dangerous electronic smog, caused by mobile phones, computers and radio interference.
All those developments—including that mentioned by the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown): the lithium-ion cathode battery technology—are respected internationally and turned into products that are used. There are other areas, including heat transfer and fluid flow services. There are the non-nuclear consultancies, and the work of the energy technology support unit.
My hon. Friend the Member for Cambridge (Mrs. Campbell)—a diligent champion for science and technology in the House—referred to air pollution in Cambridge. Again, that is part of the work. What about chemical monitoring and conservation expertise? AEA Technology is leading the field in a whole range of areas, including safety in the North sea.
Why, then, with that tremendous non-nuclear environmental expertise, are the Government going to place it in jeopardy with the Bill? It could all be lost if the Bill goes through. The hon. Member for Aylesbury (Mr. Lidington) suggested that it can succeed only if there is a sell-off. Precisely the opposite it true. It is succeeding because of its integrated functions and, of course, its well-respected international consultancy services. At least some good is associated with Government activity, when our Government's research is associated with cleaning up after the Chernobyl disaster. We are used in Slovakia because of our expertise in this country, which then reflects on the science base, to the celebration of scientists in this country. Why privatise it, push it out, suggest that there is no role? It is a fully fledged integrated operation. It is our best example of technology transfer. Because it is successful, it does not need the spur of sell-off that the Government propose. There is no need to palm it off. It is not inefficient.
773 Again, in the annual report, the chairman wrote:With our business strategy aimed at increasing profitability through the more efficient use of resources, exploitation of international markets and improved customer care, we decided to focus AEA Technology's products and services on the three inter-related fields of plant and process performance, safety and environment. All of these are areas of growing expenditure by industry world-wide. We therefore expect global demand for our services to increase substantially over the next decade … The outlook for AEA Technology is therefore bright and we are working enthusiastically to continue to develop a profitable, integrated business with a good track record and to exploit to the full the opportunities which are apparent both nationally and internationally.
AEA Technology is not inefficient. It employs more than 4,000 staff. The business has a turnover of £250 million, derived from the invoices of services, products, royalties and completed long-term contracts. The profits alone are reported to be, as other hon. Members have mentioned, about £10 million. In an interview with The Engineer magazine, on 8 December last year, the chief executive of the AEA, Dr. Peter Watson, was reported as saying that the annual turnover would rise to £400 million over the next three years. Of the present turnover, 41 per cent. comes from work for the Government, 18 per cent. from other public bodies, including, as has been mentioned, from local authorities as well as private sector business in Britain, and 23 per cent. from work for overseas customers. In other words, it is not an inefficient business. That is the whole point. The only thing that jeopardises it and threatens to make it inefficient is the Bill.
In the debate on the Loyal Address on 21 November, the President of the Board of Trade claimed that privatisation of AEA Technologywill benefit consumers and, of course, add to national competitiveness."—[Official Report, 21 November 1994; Vol. 250, c. 355]It is hard to see how in the proposals before us. As John Billard of IPMS said:The cost in lost jobs, redundancies and future changes to government will far exceed AEA's market value.
In the memorandum that the IPMS submitted to the Select Committee on Science and Technology, dealing with the efficiency unit's scrutiny of the public sector research units, it said:In the case of AEA which is already a Trading Fund and operates at arm's length from government, the rush to privatise the `commercial' arm of AEA Technology and separate it from a government owned decommissioning authority requires careful review from several angles. Firstly, it will remove from government a major pool of expertise on nuclear and other energy matters other than those relating to decommissioning.It goes on:the increasing profit projects for AEA Technology rely on exploitation of monopoly positions that currently exist … and without the guarantee of long-term government contracts after flotation, the future of the Division would be at risk.
We have heard nothing today of any of those guarantees. It is becoming increasingly clear from today's debate that privatisation makes not only no political sense and no sense in terms of Britain's science base but no economic sense.
When the Under-Secretary replies, will he confirm that more than £300 million will have to be set aside to cover redundancy costs and pensions to staff not transferring to 774 the privatised body? If so, the costs of putting scientific skills out to grass and the huge loss to the United Kingdom economy will be more than the Government want to make from the sale. That must be economic nonsense.
As has been mentioned, AEA Technology includes the National Environmental Technology Centre which came out of the merger with Warren Spring Laboratory. It worth recalling that fewer staff from Warren Spring transferred to AEA Technology than was promised.
According to the written evidence presented by the IPMS to the Science and Technology Committee,Only half the staff and functions moved to the AEA, and they have been dispersed within the AEA rather than merged with one particular unit—the NETC as promised. A few staff have been moved to other posts in the DTI and the rest have gone on either voluntary or compulsory redundancy.In other words, given our experience so far, the omens are not good.
Much valuable environmental related work has already been lost in what should be a vital area within our economy. The Department of Trade and Industry's record on research and development is appalling. On the very day that the science White Paper "Realising our Potential" was published, the DTI closed down the collaborative research programme with the Science and Engineering Research Council at an estimated loss of £40 million to research and development from public funds. The record of the Department of Trade and Industry is not good.
Many hon. Members have asked—we shall listen with interest to the Under—Secretary's reply—how the privatisation will be carried out. That is still not clear. Barclays de Zoete Wedd, which carried out the Government-commissioned consultancy study, at one point recommended contracting out the United Kingdom nuclear fusion research programme. There was then a suggestion that the fusion programme be transferred to the research councils, but that was dropped.
In answer to a parliamentary question on 17 February 1994 on the future of the AEA, the Minister for Energy and Industry said:Decisions on the form of privatisation will be taken in due course, but there is no presumption that this should follow the present structure. The decisions taken will be based on the performance in the market place and the extent to which the various options would meet customer requirements, enhanced competition, help to improve United Kingdom competitiveness and maximise the return to the taxpayer."—[Official Report, 17 February 1994; Vol. 237, c. 923.]
That tells us very little. As the hon. Member for Caithness and Sutherland (Mr. Maclennan) pointed out, if Ministers are not prepared to say how AEA Technology is to be privatised, we should not even be discussing the Bill.
This is one of those enabling Bills. It is simply saying, "Give me, the Secretary of State, power to do what I want." It contains what are described aslargely standard form privatisation provisions".Going on current form, we know what that means, and it is not welcome. It is not good enough simply to claim that a variety of options will be left open for the exact method of AEA Technology's privatisation. Employment cuts have already been made with the short-term aim of satisfying the City analysts who have been softened up to buy the concern from the Government.
According to the Minister, we do not know whether the company will be sold as a whole or in parts, by the authority of the Secretary of State or by flotation or trade 775 sale; we do not know whether it will be incorporated or unincorporated; we do not know whether it will be wholesale. Barclays de Zoete Wedd had no evidence of a single purchaser in the wings, despite what Conservative Members have suggested. A management buy-out was suggested, but the chief executive, Sir Anthony Cleaver, is reported as saying in July 1994 that a management buy-out was "not being discussed seriously". The options are first put up, and then knocked down.
On 8 April 1993, The Engineer suggested that finding a large enough prospective company would prove extremely difficult. There is not a big enough buyer out there to take over the company lock, stock and barrel. All that is really on offer is its fragmentation into separate businesses—a form of cherry picking that will undermine its activity. That is as rational a science policy as ringing up Mystic Meg: the driving force behind it is revenue collection. It is driven by ideological short-term impulses to cash the business in because the Treasury needs to balance the books. This is a Treasury-driven Bill, which—as my hon. Friends have said throughout the debate—has nothing to do with a science policy initiative.
The irony is that, although hon. Members on the opposite Benches call themselves Conservatives, throughout the last 15 years of Conservative government we have seen "Conservatives" who conserve nothing. They tear things up: they are the great dismantlers of our time. They destroy what is working well, defying the classic advice, "If it works, don't fix it." In this case, it is, "Simply fit it up for privatisation." It will be much harder to piece together the necessary experience and expertise once it has been broken down.
In its report to the DTI, BZW referred toderiving maximum benefit from synergies";but the Bill undermines the meaning of the word "synergy". It is a fragmenting Bill. The Government have a fetish about privatisation: the Bill exists because they did not manage to privatise the Royal Mail. If it moves, privatise it; if the Government cannot privatise one concern, they find another to privatise.
Is the message not getting through to the Government yet? The public are fed up to the back teeth with privatisation. This is a classic move of short-termism the short-termism that has characterised the Government's approach to research and development. If anything could be described as the hallmark of the present Administration—their characteristic trait—it is that short-termism: that interest only in what can be sold today. If something cannot be marketed immediately, it is of no value.
That is not the attitude to research that our country needs. It is not a view that invests in the future. The Government push near-market research all the time at the expense of basic research, with the result that Britain falls further and further behind. In recent years, Britain's research and development have declined, and Government spending has declined proportionately. It is down every year. We are not arguing that the Government should fund all research and development, but the worrying trend is going in the opposite direction to that in all our competitor nations. Where it is successful, we should be supporting research rather than simply flogging it off. The has no rationale. We should reject this bit of unthought-out privatisation.
In the White Paper "Realising our Potential", the Government stated: 776careful consideration will need to be given to holding the level of any such capacity to the minimum necessary to meet the Government's statutory responsibilities and other essential requirements".The decision to sell the Department of Trade and Industry's best integrated research and the best international research that we have speaks volumes. We urge the Government to think again. They should start to focus on our country's long-term strategic scientific interests. It is against the national economic interest to press ahead with the Bill. It is a fag end of a policy at the fag end of the Conservative Government. It is time that they were out. The Bill deserves to go no further. We will oppose it tonight.
§ The Parliamentary Under-Secretary of State for Industry and Energy (Mr. Richard Page)
I thank the hon. Member for Leeds, West (Mr. Battle) for his kind words at the start of his speech. From then on, however, it went downhill. When I heard that this would be a full day's debate, I must confess that I was slightly worried that I would have to make a winding-up speech lasting three quarters of an hour or an hour. But I forgot one of the Peter principles: that work expands to fill the time available. I should like to thank all hon. Members who have made my task so much easier—it is much appreciated.
I should like the House to recognise that, contrary to what many Opposition Members have said, the Bill that places AEA Technology in privatisation mode is not dogma driven, but sheer common sense. [Interruption.] I hear them laugh, but they should wait and see. AEA Technology can achieve its huge potential only in the private sector. Every examination that we have had points that way. My right hon. Friend the Minister of State reminded us that the Monopolies and Mergers Commission said that the companyrests uneasily in the state sector".The Barclays de Zoete Wedd report came out the same.
The Bill gives the Labour party a golden opportunity to show whether its clause IV road to Damascus conversion, or rather its road to Inverness conversion, is real. As the minutes tick away, it still has a chance to repent, to come over to the Conservative side, and to make the words of the right hon. Member for Sedgefield (Mr. Blair) a reality. But what do I hear and see? Moans and groans and the shaking of a head. As I suspected, whatever the packaging, old Labour is a little like old Adam—it is still lurking underneath.
Enough of that; let us get on to the business ahead. The Bill is not dogma driven.
§ Mr. Page
We are going to. That is the purpose of the Bill. If we consider AEA Technology, an image is conjured up of white coats, scientists and nuclear reactors. That does not have much to do with the man in the street 777 or the man on the proverbial No. 9 Clapham omnibus. AEA Technology is not like that. Let me suggest that it stands not for Atomic Energy Authority but for advanced engineering applications. That is AEA Technology's business. It applies leading-edge science and engineering skills to enhance industry's products, to improve its performance and to make it safer and more environmentally friendly. One or two hon. Members asked what the core is of AEA Technology. I suggest that that could be a core mission statement.
I must confess that AEA Technology is not a title that trips off the tongue. If another name could be devised that retained the links with its parent while being a little more user-friendly, I would not stand in its way.
AEA Technology provides solutions to everyday problems that face businesses in one way or another and affect us all. As the world becomes more and more environmentally conscious, the opportunities for AEA Technology will grow. That is the reason behind the debate. We want to set AEA Technology free to grow and develop.
I know that many Opposition Members and many of my hon. Friends have mentioned what AEA Technology is doing now. It is the world's largest safety and reliability consultancy, with expertise based on 30 years or so of involvement in nuclear plant safety. The techniques used to meet the safety standards demanded by the nuclear industry are directly applicable to transport, to which my right hon. Friend the Minister of State referred in his opening remarks. I shall not talk in detail about what it is doing, but it is working in partnership with British Rail and London Underground. It is helping to design stations to minimise the risk of fire and make them much safer places. It has pioneered a holistic approach to aircraft testing, designed to ensure that inspection routines pick up any structural defects before they become potential hazards.
Let us take paint, or more precisely fireproof paint. Fire can be just as damaging— [Interruption.] Opposition Members do not worry about businesses. They do not worry about earning and making a profit. Their casual remarks about their satisfaction with the profitability currently being achieved by AEA Technology are staggering and I might refer to that later.
Fire is just as much a threat to commercial activity as it is to human life. A business and the jobs associated with it cannot go on if the factory, warehouse or office are damaged, gutted or require extensive repair. AEA Technology developed a fireproof paint for structural steelwork which, I am told, is easy to apply, because I have not applied any. More importantly, it envelopes the metal in a protective layer of foam at temperatures above 250 deg C. By delaying the buckling of the steelwork—it is hard to believe that RSJs buckle like sticks of plasticine, but I have seen it happen—the paint increases the chances of a building surviving intact and getting back into action much sooner.
§ Mr. Dennis Turner (Wolverhampton, South-East)
I am just wondering whether the Minister was talking about paint or whitewash.
§ Mr. Page
That is one of the best interventions that the hon. Gentleman has made in all the years that he has been in the House. The House can judge the standard of the rest.
778 Let me come back to paint—not whitewash. The paint is used in many buildings, particularly by the British Airports Authority. As the House will know immediately, the mention of airports will bring me on to artificial limbs. The House will see the immediate connection. Aircraft and artificial limbs have two common characteristics. They must be lightweight and capable of withstanding high levels of stress. AEA Technology worked with the manufacturers to produce an artificial leg that is very light, but extremely strong and capable of supporting the heaviest and most active of customers. Over 10,000 people a year benefit directly from its skills.
I should like to stop talking in general terms and concentrate in more detail on one of the specific things that goes on at AEA Technology—the National Chemical Emergency Centre. The centre provides immediate expert advice and support 24 hours a day and 365 days a year to the emergency services and others faced with incidents involving potentially dangerous chemicals. One of the first jobs that I undertook as soon as I found out that I had become a Minister was to visit Harwell and Culham. I sat in the control room at the centre and saw it at work. I shall give the House a few real-life examples of what goes on there to show how its skills operate.
There is an overturned tanker on the motorway and chemicals are leaking on to the road. Through radio and computer technology, within minutes the fire officer in charge has full information on the chemical and knows how he should deal with it to avert potential danger. The Army ordnance corps in Bosnia rings up on a Sunday morning. A lorry is in a ditch, riddled with bullets and leaking cyanide-based chemicals from damaged drums. The men on the ground need advice quickly on how to respond and protect themselves. Even though it is Sunday, advice is available within a few minutes.
§ Mrs. Jacqui Lait (Hastings and Rye)
I am delighted to hear that my hon. Friend is such a supporter of Hazchem, which, as he so rightly mentions, is a staple of the chemical industry. Will he tell the House a little more about how successful it has been in establishing European Union standards for hazardous chemicals?
§ Mr. Page
My hon. Friend makes the point that the centre has led the way in introducing uniform signs, especially on the backs of lorries, so that throughout the European Union—[Laughter.] Hon. Members may laugh, but they should know from travelling on roads that on the backs of lorries signs tell them what chemical is carried. My hon. Friend is absolutely right in making the point that we have succeeded in leading the way in bringing about that form of harmonisation.
§ Mr. Frank Cook
I am afraid that I must correct the Minister. The Hazchem system—standing for hazardous chemicals—was devised on Teesside, between Cleveland county council and Imperial Chemical Industries plc. Let us have the record straight, please.
§ Mr. Page
That is absolutely right, but the centre uses the system for all its customers whenever it can. I have been to the centre and seen it in operation.
The last example that I shall give the House is of a jumbo jet landing at Heathrow. It has a leaking drum in its hold. The documentation on the load shows that the contents are relatively harmless, but the labelling on the drum indicates the presence of something altogether nastier. The centre is asked to send people to the airport 779 to find out what the chemical is and deal with the situation. On arrival, they confirm that the drum contains a dangerous chemical—toxic, corrosive, flammable and exactly the wrong sort of substance to be sloshing around the hold of a trans-Atlantic jet. The centre's team immediately supervises the decontamination of the aircraft. Yes, it is a routine enough job for the centre, but the consequences of what may have happened if that aircraft had taken off do not bear thinking about.
Hon. Members have spoken about AEA Technology as a world leader in computational fluid dynamics. This is not the hour to go into computational fluid dynamics or to explain it to the House—[HON. MEMBERS: "Go on."]—even though I can see that one or two hon. Members are burning to know about its advantages. Essentially, it deals with fluid flow and heat transfer problems. The technology was originally developed for nuclear purposes, but it has wide-ranging uses across industry.
AEA Technology, as all hon. Members recognise, has many strands of activity that are applicable throughout the world to safety and the environment. I am absolutely convinced that without the spur and the opportunity of moving into the private sector, AEA Technology will not be able to take full advantage of its potential. Any business needs a chance to develop, a chance to expand. It needs to market its products; it needs to tell the world just how good we are in that particular area. That is why AEA Technology currently has overseas offices in Tokyo, Seoul, Hong Kong, Prague, Bratislava, Budapest, Brussels and Washington. All those offices, except the one in Washington, are new offices that have opened in the past year.
§ Mr. Battle
The Government's usual argument is to say that they are privatising an enterprise because it is not succeeding. AEA Technology is doing extremely well. Why privatise it?
§ Mr. Page
The hon. Gentleman may be satisfied with the progress of AEA Technology. I believe that it can do a lot better and I shall come on to that point.
Much as I am enjoying myself, as time is running out, I shall refer to some of the comments made by hon. Members. I respond first to the hon. Member for Kirkcaldy (Dr. Moonie), who opened the debate on behalf of the Labour party. I was surprised by the first part of his speech, because I thought that he was talking about the Post Office; I thought that I had gone into the wrong debate. He then moved on to other matters and he was joined by the hon. Member for Ellesmere Port and Neston (Mr. Miller), who ran the tired old plea of saying that having commercial activities in the state system bankrolled by the taxpayer and then second-guessed by the politician was the way forward. Has the Labour party not yet realised, through all the successes of privatisation, that that is not the way forward? The way forward is to let commercial managers dealing in the real world make the decisions. We should let them go forward and provide jobs, opportunities and expansion.
If Labour Members want a classic example of what they are advocating, I remind them of the National Enterprise Board. Politicians went out picking winners. How many hundreds of millions did that cost the taxpayer? More than enough. That is exactly why the industry should be allowed to make its own decisions and that is why it should not be second-guessed by the experts on the Opposition Benches.
780 I take issue with some of the remarks about the decision-making process behind Procord. I found them distasteful and inaccurate, and they were full of innuendo. I am glad tonight to be able to give the lie to some of the comments made. I am fresh to this job, so I do not carry any particular baggage. I have seen the figures connected with Procord. I cannot tell the House the figures because they are commercially confidential, but I can give hon. Members an absolute assurance that the decision to choose Procord was clear cut because its offer was far ahead of any other offer. Not to have taken that offer would have been ridiculous. As my right hon. Friend the Minister of State said, Sir Anthony Cleaver left the room and was not involved when the decision was made. Some of the remarks made were absolutely disgraceful. One of the other reasons for choosing Procord is that it wants to develop a business and to build and expand on that. That was a further opportunity for the staff.
Many hon. Members contributed to the debate; I shall not be able to accommodate all of them. My hon. Friend the Member for South Dorset (Mr. Bruce) made a careful speech. He remarked on the need for flexibility by the work force at Winfrith. He said that those people must change their focus and extend their non-nuclear work. I can confirm to my hon. Friend's constituents his assiduity in promoting the future activities of Winfrith. I suggest that he is one of my more regular correspondents; he was certainly one of my predecessor's regular correspondents.
The hon. Member for Caithness and Sutherland (Mr. Maclennan), my hon. Friend the Member for Wantage (Mr. Jackson) and four other hon. Members made the same point. They all wanted a firm commitment to the method of privatisation which, in effect, would close off freedom of choice. There was some suspicion that there was a hidden Government agenda to which we were secretly working. I assure the House that there is no secret Government agenda. All we want is to give AEA Technology the chance over the next year to develop its plans and then to choose the best method to move it forward. Of course, I am aware of the number of hon. Members who want it to be moved into the private sector as one unit on a flotation. I hear and understand that message, but hon. Members will understand that it would be wrong of me either to accept or to deny it tonight.
§ Mr. Maclennan
Part of the point of the message from the hon. Member for Wantage (Mr. Jackson) and myself, which the Minister may care to address now, is the fact that we want the House to be informed about the method that has been decided upon and then to consider the aptness of that method in the circumstances. Will the Minister undertake to bring the matter back to the House before a decision is taken? [interruption.]
§ Madam Deputy Speaker (Dame Janet Fookes)
Order. Before the Minister continues, I must tell hon. Members that I am growing rather tired of hearing running commentaries and private conversations in the House. I should like a little more quiet, so that I can hear the Minister without straining.
§ Mr. Page
Thank you, Madam Deputy Speaker.
There is nothing unusual in the process that we are employing, and it will not be necessary to bring the matter to the House. Obviously, the House will be informed about what is to happen, but if the Opposition feel so enthusiastic about discussing it, they can use a Supply clay to do so.
781 The hon. Member for Caithness and Sutherland also said that the proposed appointment of a site managing agent at Dounreay might have some effect on safety. As the House knows, for the Government safety is of paramount importance, and the hon. Gentleman's idea that the appointment of the agent will affect safety is an incorrect assumption.
Dounreay's safety regime will continue to be governed by the legal responsibilities under the nuclear site licence and by the nuclear installations inspectorate's regulatory regime. Those legal responsibilities will remain with UKAEA. It will continue to exercise them by issuing corporate safety instructions. Implementation of the UKAEA safety regime at Dounreay will remain the responsibility of the Government division site director. The managing agent will report to him and operate under his direction. The only difference from the present arrangements will be the presence of a stronger management team, which will enhance rather than diminish safety.
My hon. Friend the Member for Aylesbury (Mr. Lidington) spelt out the virtues of privatisation and the need to develop new markets, especially overseas. He also drew attention to areas of positive advantage and, like my hon. Friend the Member for Chesham and Amersham (Mrs. Gillan), said that the proof of the pudding was in the eating.
Indeed, the closest parallel to AEA Technology is Amersham International, and my hon. Friend the Member for Chesham and Amersham delivered one by one the hammer blows of the success of that company. Employment is up from 2,000 to 3,400, turnover is up, and profit—a dirty word to the Labour party—is up from £4.1 million to £43.5 million. Yet the Labour party would deny AEAT the chance to deliver the goods and to emulate Amersham International.
I shall bring my remarks to a close by mentioning again the concerns that some hon. Members, including the hon. Member for Caithness and Sutherland, expressed about safety. Whatever we want to do in such an area, the safety aspect must be paramount, and AEAT is similarly committed to maintaining the highest standards of health and safety. Whether it is in the public or the private sector, it will follow safety procedures fully consistent with those that apply within UKAEA as a whole. The suggestion that a privatised AEAT would cut corners on safety is arrant nonsense and does no credit to the House. Indeed, it is an affront to the dignity of the people in AEAT.
Hon. Members have described UKAEA as a national asset, and I agree. It has one of the highest—if not the highest—concentrations of graduates and skilled manpower in the country, and it has specialist facilities for staff to utilise those skills. It is essential that, as a nation, we get a good return from those skills, and that is what privatisation is all about.
AEA Technology has the potential to become a world-class player in the international science and engineering market. It has the skills and technology to compete successfully in the markets and to secure business for itself and for other British firms. That is what the Bill is about. It is the only way forward, and I commend it to the House.
§ Question put, That the Bill be now read a Second time:—782
§ The House divided: Ayes 290, Noes 250.785
|Division No. 102]||[9.59 pm|
|Ainsworth Peter (East Surrey)||Dicks, Terry|
|Aitken, Rt Hon Jonathan||Dorrell, Rt Hon Stephen|
|Alison, Rt Hon Michael (Selby)||Douglas-Hamilton, Lord James|
|Allason, Rupert (Torbay)||Dover, Den|
|Amess, David||Duncan, Alan|
|Ancram, Michael||Dunn, Bob|
|Arbuthnot, James||Dykes, Hugh|
|Arnold, Jacques (Gravesham)||Eggar, Rt Hon Tim|
|Arnold, Sir Thomas (Hazel Grv)||Elletson, Harold|
|Ashby, David||Emery, Rt Hon Sir Peter|
|Atkins, Robert||Evans, David (Welwyn Hatfield|
|Atkinson, David (Bour'mouth E)||Evans, Jonathan (Brecon)|
|Atkinson, Peter (Hexham)||Evans, Nigel (Ribble Valley)|
|Baker, Rt Hon Kenneth (Mole V)||Evans, Roger (Monmouth)|
|Baker, Nicholas (North Dorset)||Evennett, David|
|Baldry, Tony||Fabricant, Michael|
|Banks, Matthew (Southport)||Field, Barry (Isle of Wight)|
|Banks, Robert (Harrogate)||Fishburn, Dudley|
|Bates, Michael||Forman, Nigel|
|Batiste, Spencer||Forsyth, Rt Hon Michael (Stirling)|
|Bellingham, Henry||Forth, Eric|
|Bendall, Vivian||Fowler, Rt Hon Sir Norman|
|Beresford, Sir Paul||Fox, Sir Marcus (Shipley)|
|Body, Sir Richard||Freeman, Rt Hon Roger|
|Bonsor, Sir Nicholas||French, Douglas|
|Booth, Hartley||Gale, Roger|
|Boswell, Tim||Gallie, Phil|
|Bottomley, Peter (Eltham)||Garel-Jones, Rt Hon Tristan|
|Bowis, John||Garnier, Edward|
|Boyson, Rt Hon Sir Rhodes||Gill, Christopher|
|Brandreth, Gyles||Gillan, Cheryl|
|Brazier, Julian||Goodson-Wickes, Dr Charles|
|Bright, Sir Graham||Gorman, Mrs Teresa|
|Brooke, Rt Hon Peter||Gorst, Sir John|
|Brown, M (Brigg & Cl'thorpes)||Grant, Sir A (SW Cambs)|
|Browning, Mrs Angela||Greenway, Harry (Ealing N)|
|Bruce, Ian (Dorset)||Greenway, John (Ryedale)|
|Budgen, Nicholas||Griffiths, Peter (Portsmouth, N)|
|Burns, Simon||Grylls, Sir Michael|
|Burt, Alistair||Gummer, Rt Hon John Selwyn|
|Butler, Peter||Hague, William|
|Butterfill, John||Hamilton, Neil (Tatton)|
|Carlisle, John (Luton North)||Hampson, Dr Keith|
|Carlisle, Sir Kenneth (Lincoln)||Hannam, Sir John|
|Carrington, Matthew||Hargreaves, Andrew|
|Carttiss, Michael||Harris, David|
|Cash, William||Haselhurst, Alan|
|Channon, Rt Hon Paul||Hawkins, Nick|
|Chapman, Sydney||Hayes, Jerry|
|Churchill, Mr||Heald, Oliver|
|Clappison, James||Heath, Rt Hon Sir Edward|
|Clark, Dr Michael (Rochford)||Heathcoat-Amory, David|
|Clarke, Rt Hon Kenneth (Ru'clif)||Hendry, Charles|
|Clifton-Brown, Geoffrey||Heseltine, Rt Hon Michael|
|Coe, Sebastian||Hicks, Robert|
|Colvin, Michael||Higgins, Rt Hon Sir Terence|
|Congdon, David||Hogg, Rt Hon Douglas (G'tham)|
|Conway, Derek||Horam, John|
|Coombs, Anthony (Wyre For'st)||Hordern, Rt Hon Sir Peter|
|Coombs, Simon (Swindon)||Howard, Rt Hon Michael|
|Cope, Rt Hon Sir John||Howarth, Alan (Strat'rd-on-A)|
|Cormack, Sir Patrick||Howell, Rt Hon David (G'dford)|
|Couchman, James||Howell, Sir Ralph N Norfolk)|
|Cran, James||Hughes, Robert (Aberdeen N)|
|Currie, Mrs Edwina (S D'by'ire)||Hunt, Rt Hon David (Wirral W)|
|Curry, David (Skipton & Ripon)||Hunter, Andrew|
|Davies, Quentin (Starnford)||Jack, Michael|
|Davis, David (Boothferry)||Jackson, Robert (Wantage)|
|Day, Stephen||Jenkin, Bernard|
|Deva, Nirj Joseph||Jessel, Toby|
|Devlin, Tim||Johnson Smith, Sir Geoffrey|
|Jones, Gwilym (Cardiff N)||Robinson, Mark (Somerton)|
|Jones, Robert B (W Hertfdshr)||Roe, Mrs Marion (Broxbourne)|
|Jopling, Rt Hon Michael||Rowe, Andrew (Mid Kent)|
|Kellett-Bowman, Dame Elaine||Rumbold, Rt Hon Dame Angela|
|Key, Robert||Ryder, Rt Hon Richard|
|Kilfedder, Sir James||Sackville, Tom|
|King, Rt Hon Tom||Scott, Rt Hon Sir Nicholas|
|Kirkhope, Timothy||Shaw, David (Dover)|
|Knapman, Roger||Shaw, Sir Giles (Pudsey)|
|Knight, Mrs Angela (Erewash)||Shephard, Rt Hon Gillian|
|Knight, Greg (Derby N)||Shepherd, Colin (Hereford)|
|Knight, Dame Jill (Bir'm E'stn)||Shepherd, Richard (Aldridge)|
|Knox, Sir David||Shersby, Michael|
|Kynoch, George (Kincardine)||Sims, Roger|
|Lait, Mrs Jacqui||Skeet, Sir Trevor|
|Lang, Rt Hon Ian||Smith, Tim (Beaconsfield)|
|Lawrence, Sir Ivan||Soames, Nicholas|
|Legg, Barry||Spencer, Sir Derek|
|Leigh, Edward||Spicer, Sir James (W Dorset)|
|Lennox-Boyd, Sir Mark||Spicer, Michael (S Worcs)|
|Lester, Jim (Broxtowe)||Spink, Dr Robert|
|Lidington, David||Spring, Richard|
|Lightbown, David||Sproat, Iain|
|Lilley, Rt Hon Peter||Squire, Robin (Hornchurch)|
|Lloyd, Rt Hon Sir Peter (Fareham)||Stanley, Rt Hon Sir John|
|Lord, Michael||Steen, Anthony|
|Lyell, Rt Hon Sir Nicholas||Stephen, Michael|
|MacGregor, Rt Hon John||Stern, Michael|
|MacKay, Andrew||Stewart, Allan|
|Maclean, David||Streeter, Gary|
|McLoughlin, Patrick||Sumberg, David|
|McNair-Wilson, Sir Patrick||Sweeney, Walter|
|Madel, Sir David||Tapsell, Sir Peter|
|Maitland, Lady Olga||Taylor, Ian (Esher)|
|Malone, Gerald||Taylor, John M (Solihull)|
|Mans, Keith||Taylor, Sir Teddy (Southend, E)|
|Marland, Paul||Temple-Morris, Peter|
|Marshall, Sir Michael (Arundel)||Thomason, Roy|
|Martin, David (Portsmouth S)||Thompson, Sir Donald (C'er V)|
|Mawhinney, Rt Hon Dr Brian||Thompson, Patrick (Norwich N)|
|Merchant, Piers||Thornton, Sir Malcolm|
|Mills, Iain||Thurnham, Peter|
|Mitchell, Andrew (Gedling)||Townend John (Bridlington)|
|Mitchell, Sir David (NW Hants)||Townsend, Cyril D (Bexl'yh'th)|
|Moate, Sir Roger||Tracey, Richard|
|Monro, Sir Hector||Tredinnick, David|
|Montgomery, Sir Fergus||Trend, Michael|
|Moss, Malcolm||Trotter, Neville|
|Nelson, Anthony||Twinn, Dr Ian|
|Neubert, Sir Michael||Vaughan, Sir Gerard|
|Newton, Rt Hon Tony||Viggers, Peter|
|Nicholls, Patrick||Waldegrave, Rt Hon William|
|Nicholson, David (Taunton)||Walden, George|
|Nicholson, Emma (Devon West)||Walker, Bit (N Tayside)|
|Norris, Steve||Waller, Gary|
|Onslow, Rt Hon Sir Cranley||Wardle, Charles (Bexhill)|
|Oppenheim, Phillip||Waterson, Nigel|
|Ottaway, Richard||Watts, John|
|Page, Richard||Wells, Bowen|
|Paice, James||Wheeler, Rt Hon Sir John|
|Patrick, Sir Irvine||Whitney, Ray|
|Patten, Rt Hon John||Whittingdale, John|
|Pattie, Rt Hon Sir Geoffrey||Widdecombe, Ann|
|Pawsey, James||Wiggin, Sir Jerry|
|Peacock, Mrs Elizabeth||Wilkinson, John|
|Pickles, Eric||Wilshire, David|
|Porter, Barry (Wirral S)||Winterton, Mrs Ann (Congleton)|
|Porter, David (Waveney)||Winterton, Nicholas (Macc'f'ld)|
|Portillo, Rt Hon Michael||Wolfson, Mark|
|Redwood, Rt Hon John||Wood, Timothy|
|Renton, Rt Hon Tim||Yeo, Tim|
|Richards, Rod||Young, Rt Hon Sir George|
|Robathan, Andrew||Tellers for the Ayes:|
|Roberts, Rt Hon Sir Wyn||Mr. David Willets and|
|Robertson, Raymond (Ab'd'n S)||Mr. Liam Fox.|
|Abbott, Ms Diane||Fatchett, Derek|
|Adams, Mrs Irene||Field, Frank (Birkenhead)|
|Anger, Nick||Fisher Mark|
|Allenen, Graham||Flynn, Paul|
|Alton, David||Foster, Rt Hon Derek|
|Anderson, Donald (Swansea E)||Foster, Don (Bath)|
|Anderson, Ms Janet (Ros'dale)||Foulkes, George|
|Armstrong, Hilary||Fraser, John|
|Ashdown, Rt Hon Paddy||Fyfe, Maria|
|Ashton, Joe||Galloway, George|
|Austin-Walker, John||Gapes, Mike|
|Barnes, Harry||Garrett, John|
|Barron, Kevin||George, Bruce|
|Battle, John||Gerrard, Neil|
|Bayley, Hugh||Gilbert, Rt Hon Dr John|
|Beckett, Rt Hon Margaret||Godman, Dr Norman A|
|Berth, Rt Hon A J||Godsiff, Roger|
|Bell, Stuart||Golding, Mrs Llin|
|Benn, Rt Hon Tony||Gordon, Mildred|
|Bennett, Andrew F||Graham, Thomas|
|Benton, Joe||Grant, Bernie (Tottenham)|
|Bermingham, Gerald||Griffiths, Nigel (Edinburgh S)|
|Betts, Clive||Grocott, Bruce|
|Boateng, Paul||Gunnell, John|
|Bradley, Keith||Hain, Peter|
|Bray, Dr Jeremy||Hall, Mike|
|Brown, Gordon (Dunfermline E)||Hanson, David|
|Brown, N (N'c'tle upon Tyne E)||Harman, Ms Harriet|
|Burden, Richard||Harvey, Nick|
|Byers, Stephen||Henderson, Doug|
|Caborn, Richard||Heppell, John|
|Callaghan, Jim||Hill, Keith (Streatham)|
|Campbell, Mrs Anne (C'bridge)||Hinchliffe, David|
|Campbell, Menzies (Fife NE)||Hodge, Margaret|
|Campbell, Ronnie (Blyth V)||Hoey, Kate|
|Campbell-Savours, D N||Home Robertson, John|
|Canavan, Dennis||Hood, Jimmy|
|Cattle, Alexander (Montgomery)||Hoon, Geoffrey|
|Chisholm, Malcolm||Howarth, George (Knowsley North)|
|Church, Judith||Hoyle, Doug|
|Clapham, Michael||Hughes, Kevin (Doncaster N)|
|Clark, Dr David (South Shields)||Hughes, Robert (Aberdeen N)|
|Clarke, Tom (Monklands W)||Hutton, John|
|Clelland, David||Illsley, Eric|
|Clwyd, Mrs Ann||Ingram, Adam|
|Coffey, Ann||Jackson, Glenda (H'stead)|
|Cohen, Harry||Jackson, Helen (Shef'ld, H)|
|Connarty, Michael||Jamieson, David|
|Cock, Frank (Stockton N)||Jones, Barry (Alyn and D'side)|
|Corbett, Robin||Jones, Ieuan Wyn (Ynys Mon)|
|Corbyn, Jeremy||Jones, Jon Owen (Cardiff C)|
|Corston, Jean||Jones, Lynne (B'ham SO)|
|Cousins, Jim||Jones, Martyn (Clwyd, SW)|
|Cunningham, Jim (Covy SE)||Jowell, Tessa|
|Cunningham, Rt Hon Dr John||Kaufman, Rt Hon Gerald|
|Dafis, Cynog||Keen, Alan|
|Dalyell, Tam||Kennedy, Charles (Ross,C&S)|
|Darling, Alistair||Kennedy, Jane (Lpool Brdgn)|
|Davidson, Ian||Khabra, Piara S|
|Davies, Bryan (Oldham C'tral)||Kilfoyle, Peter|
|Davies, Rt Hon Denzil (Llanelli)||Lestor, Joan (Ecdes)|
|Davies, Ron (Caerphilly)||Lewis, Terry|
|Denham, John||Liddell, Mrs Helen|
|Dewar, Donald||Livingstone, Ken|
|Dixon, Don||Lloyd, Tony (Stretford)|
|Dobson, Frank||Llwyd, Elfyn|
|Donohoe, Brian H||Lynne, Ms Liz|
|Dowd, Jim||McAllion, John|
|Dunwoody, Mrs Gwyneth||McAvoy, Thomas|
|Eagle, Ms Angela||McCartney, Ian|
|Eastham, Ken||Macdonald, Calum|
|Enright, Derek||McFall, John|
|Evans, John (St Helens N)||McKelvey, William|
|Ewing, Mrs Margaret||Mackinlay, Andrew|
|McLeish, Henry||Rendel, David|
|Maclennan, Robert||Robertson, George (Hamilton)|
|McMaster, Gordon||Robinson, Geoffrey (Co'try NW)|
|McNamara, Kevin||Roche, Mrs Barbara|
|MacShane, Denis||Rogers, Allan|
|McWilliam, John||Rooker, Jeff|
|Madden, Max||Rooney, Terry|
|Maddock, Diana||Ross, Ernie (Dundee W)|
|Mahon, Alice||Rowlands, Ted|
|Mandelson, Peter||Ruddock, Joan|
|Marek, Dr John||Sedgemore, Brian|
|Marshall, David (Shettleston)||Sheerman, Barry|
|Marshall, Jim (Leicester, S)||Shore, Rt Hon Peter|
|Martin, Michael J (Springburn)||Short, Clare|
|Martlew, Eric||Simpson, Alan|
|Maxton, John||Skinner, Dennis|
|Meacher, Michael||Smith, Andrew (Oxford E)|
|Meale, Alan||Smith, Chris (Isl'ton S & F'sbury)|
|Michie, Bill (Sheffield Heeley)||Smith, Llew (Blaenau Gwent)|
|Michie, Mrs Ray (Argyll & Bute)||Snape, Peter|
|Milburn, Alan||Soley, Clive|
|Miller, Andrew||Speller, John|
|Mitchell, Austin (Gt Grimsby)||Squire, Rachel (Dunfermline W)|
|Moonie, Dr Lewis||Steinberg, Gerry|
|Morgan, Rhodri||Stevenson, George|
|Morley, Elliot||Stott, Roger|
|Morris, Rt Hon Alfred (Wy'nshawe)||Strang, Dr. Gavin|
|Morris, Estelle (B'ham Yardley)||Straw, Jack|
|Mudie, George||Sutcliffe, Gerry|
|Mullin, Chris||Taylor, Mrs Ann (Dewsbury)|
|Murphy, Paul||Taylor, Matthew (Truro)|
|Oakes, Rt Hon Gordon||Timms, Stephen|
|O'Brien, Mike (N W'kshire)||Tipping, Paddy|
|O'Brien, William (Normanton)||Touhig, Don|
|Olner, Bill||Turner, Dennis|
|O'Neill, Martin||Tyler, Paul|
|Orme, Rt Hon Stanley||Walker, Fit Hon Sir Harold|
|Patchett, Terry||Wallace, James|
|Pearson, Ian||Wardell, Gareth (Gower)|
|Pendry, Tom||Wareing, Robert N|
|Pickthall, Colin||Watson, Mike|
|Pike, Peter L||Wicks, Malcolm|
|Pope, Greg||Wigley, Dafydd|
|Powell, Ray (Ogmore)||Williams, Rt Hon Alan (Sw'n W)|
|Prentice, Gordon (Pendle)||Williams, Alan W (Carmarthen)|
|Prescott, Rt Hon John||Wilson, Brian|
|Primarolo, Dawn||Wise, Audrey|
|Purchase, Ken||Worthington, Tony|
|Quin, Ms Joyce||Young, David (Bolton SE)|
|Randall, Stuart||Tellers for the Noes:|
|Raynsford, Nick||Mr. Eric Clarke and|
|Reid, Dr John||Mr. John Cummings.|
§ Question accordingly agreed to.
§ Bill read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).