§ 7.2 p.m.
§ Lord STRABOLGI
My Lords, I beg to move that this Bill be now read a second time. This Bill, which is an important one, deals with financial questions relating to British Nuclear Fuels Limited, The National Nuclear Corporation Limited, and the Radiochemical Centre Limited. The Bill allows the provision of more public capital for BNFL and TRCL by the Secretary of State and the United Kingdom Atomic Energy Authority, to which I shall refer from now on, if I may, as the AEA. It also empowers the Government to guarantee loans raised by either company. For BNFL only, it authorises the 716 Government to guarantee, within financial limits, the company's ability to refund advance payments which customers may have made under contracts for the company's services. Finally, it authorises the Government to incur expenditure in acquiring shares in the NNC, whether from the AEA or from any other willing vendor. I should emphasise that this is not a nationalisation power or a power of compulsory acquisition.
BNFL was set up in 1971, and the Atomic Energy Authority Act of 1971 transferred to it the Atomic Energy Authority's nuclear fuel cycle business—that is, enrichment of uranium, manufacture of fuel and reprocessing of irradiated fuel. The company also procures uranium, but mainly for the generating boards; and it operates two Magnox power stations and sells electricity to the grid. Following the transfer of this fuel cycle business, the company issued some £18 million paid-up shares to the AEA, and assumed the outstanding liability for some £36 million of Exchequer loans related to the latter's nuclear fuel operations. The loans are repayable by instalments, and have now been reduced to £26 million.
Sections 11 and 12 of the 1971 Act allowed the Secretary of State and the AEA to provide further capital within an aggregate further sum of £50 million, which limit could be, and indeed recently has been, increased by order to £75 million. The company's profits before tax in the last financial year were some £9 million, compared with £3.4 million in its first year of operation. Profits have been ploughed back, and the company was substantially self-financing during the first five years of its life.
The company now needs substantial external finance, however, for its capital investment programme. In this connection, the Government have made £25 million available to the company under the 1971 Act. But it is clear that the limit of £75 million on capital payments will not cover capital needs in the next five years or so. Clause 2(1)(a) of the Bill, therefore, increases the payment limits to £300 million and provides that this limit may be raised to £500 million by order, the draft of which must be approved by Affirmative Resolution.
717 The company's investment programme will involve a total expenditure during the next ten years of about £1,500 million at 1976 prices. This expenditure will cover such items as the refurbishing of the existing Magnox reprocessing plant, the development of the waste vitrification process, the development and extension of the company's uranium enrichment plant at Capenhurst, work to maintain the earning capacity of other facilities on the company's sites, and the construction of a new plant at Windscale for the reprocessing of oxide fuel for home and overseas customers. Part of this will be financed from internal resources, and part of the oxide plant in particular would be financed by advance payments from overseas customers. But taking account of this the additional requirements for external capital to the years 1982/3 will be some £230 million, a sum which far outruns the present statutory limit of £75 million on capital payments to the company. Taking account also of the higher costs which may arise, for example, from constantly improving environmental and safety requirements, leads to the new payments limits of £300 million and £500 million provided under Clause 2(1) that I have already mentioned.
My Lords, I would, if I may, emphasise two points. Construction of the proposd oxide reprocessing plant at Windscale depends on planning permission. As the House will know, my right honourable friend the Secretary of State for the Environment has announced his intention of calling in the application for his own decision following a public inquiry. The fact that the Government are ensuring that the company may have access to funds for its investment programme (including this plant if it is built), does not in any way prejudice that inquiry.
The Government also wish to see the company cover some of its investment by private borrowing so as to diversify its sources of finance. To facilitate this, Clause 1(1) of the Bill will empower them to guarantee such borrowings. Borrowing against Government guarantee is effectively an alternative to direct Government capital so, under Clause 2(2)(c) of the Bill, sums guaranteed would count against the new limits. The company has, in fact, already negotiated a private loan facility of £100 million from a banking consortium 718 and the Government intend to guarantee it subject to the enactment of this legislation.
I have mentioned that the part of the new oxide plant provided for overseas customers will be financed by advance payments, The customer would normally get his money back, so to speak, to set off against charges made for services. But there could be circumstances in which they would be returnable in cash. Large sums are involved and overseas customers may require some external guarantee of the company's ability to repay in such circumstances. Clause 1(2) of the Bill therefore authorises such guarantees, within a separate limit of £400 million, which may be increased to £500 million by order under Clause 2(3). These sums reflect the possible cost of the plant capacity which might be involved.
The Radiochemical Centre Limited, which was also set up in 1971, took over the radio-isotope business then carried on by the Atomic Energy Authority. Section 13 of the 1971 Act envisages the provision of public capital for the company, but limits the amount of payments to it by the Secretary of State and the AEA to £5 million, which sum may be increased by order to £7 million. TRC's business is the manufacture and sale of radio-isotopes for use in medicine, research and industry. It is a vigorous company, which competes successfully in world markets. It made a group net profit—after interest but before taxation—in 1975–76 of £2.6 million and a return of 36 per cent. on assets employed. It has paid dividends to the Exchequer, through the AEA, in every year since its incorporation.
The company will require some £10 million external capital to cover its expansion plans, substantially for financing a new plant at Cardiff, and £5 million of this will be provided by means of the AEA taking up further shares. The remainder is to be raised privately. Although the statutory limits on the provision of capital have thus not ye; been exhausted, it seems prudent to make provision now to ensure that this expanding company will have access to further capital as the need raises. Clause 2(1)(b) of the Bill therefore increases the upper limit on payments to the company to £15 million—an adjustment of the original 719 £7 million for inflation. It also seems prudent to put the company on the same footing as BNFL, and to provide for Government guarantees of loans. Clause 1(1) of the Bill does this. Again, under Clause 2(2)(c) sums guaranteed will count against the main financing limits.
Finally, Clause 3 of the Bill authorises the Secretary of State to incur expenditure on, or in connection with, the acquisition of shares in the National Nuclear Corporation Limited or its subsidiaries. I emphasise that this is not a power to nationalise. It simply puts on a more sensible basis the powers which the Government already have for managing their interests in the nuclear industry. NNC was set up in 1973 when it was decided to reorganise the then existing nuclear construction companies—namely, British Nuclear Design and Construction Limited and the Nuclear Power Group Limited—into a single unit, which comprised NNC and a wholly-owned subsidiary, the Nuclear Power Company Limited. The AEA took a 15 per cent. stake in the NNC; the GEC, 50 per cent. and British Nuclear Associates, a consortium of companies engaged in the nuclear engineering field, 35 per cent. The Secretary of State did not at that time have express financial authority to incur expenditure to take up the shares which were to represent the public stake. They were therefore taken up by the AEA, under the Atomic Energy Authority Act 1954. For the same reason, the Authority was the agency which acquired further shares in NNC in 1976 when it was decided, by agreement between all the parties, that the private stake should be reduced and the AEA's holding increased to 35 per cent.
This indirect management of the public holding in NNC is workable at the moment. The position is in many ways similar to that of BNFL and TRCL, in which the public shareholding is also held by the AEA. But in the future it may be found advantageous, and in the interests of the nuclear industry, for these holdings to be held and managed by the Government more directly. Existing legislation allows this for BNFL and TRCL but not for NNC. Clause 3 of the Bill remedies the sitution, but leaves transfer from the AEA on a voluntary basis. It would also allow the Government, subsequent to such a transfer, to maintain their proportional 720 holding in the company if further capital needed to be introduced, and to acquire further shares from the other interests if they agreed that this should be done.
I emphasise that this would not empower the Government to compel anyone to transfer shares in NNC or to fix the transfer price. It would simply allow expenditure on buying shares if the holders are willing to sell; and to pay an agreed price, not a price fixed unilaterally. I would also emphasise that the provision does not mean that expenditure is in prospect. It is not. The Government have no proposals for buying any shares in NNC. I hope your Lordships will agree that this power to incur expenditure in acquiring NNC shares is a sensible one, and that it is sensible to take it now. I beg to move that the Bill be now read a second time.
§ Moved, That the Bill be now read 2ª. —(Lord Strabolgi.)
§ 7.18 p.m.
§ Lord TREFGARNE
My Lords, the House will be grateful to the noble Lord, Lord Strabolgi, for a very full and careful explanation of the purposes of the Bill. It is, of course, a Money Bill. Therefore we shall not be considering it in detail in Committee and are thus denied the opportunity of tabling probing Amendments. I shall take the opportunity on this Second Reading to make a few points: first, of a rather general nature relating to our present nuclear programme and, finally, of a rather more detailed nature arising out of the specific provisions of the Bill.
The present Secretary of State for Energy, Mr. Benn, has held his present office for two years. We are hoping that soon he will be able to begin making some major decisions. I do not want to sound too critical in that way. I think that some of the decisions might well have been made by now, but one does not want to minimise the difficulties confronting him. The most important decision which is still on his desk is the decision as to which of the principal types of reactor he is to select for the next generation of power stations. This is a decision which, in the view of the industry at least, is now pressing, and which I would hope we can expect in the near future.
The three principal reactors which present themselves as possibilities are, 721 first, the steam generating heavy water reactor; secondly, the pressurised-type reactor, designed in the United States and used there; finally, the advanced gas-cooled reactor. Many of us will have read that the American pressurised-type reactor has been criticised in some quarters because of the alleged shortcomings in safety. But it is, we are told, the cheapest at least of the options available. I do not pretend that the decision is an easy one, but I hope that the noble Lord, Lord Strabolgi, will be able to give us some indication of whether the Minister's mind is moving in that direction.
A second matter to which I hope the Secretary of State will be turning his mind in the near future in conjunction with his European colleagues, is the question of the siting of the research centre for the JET project. The Secretary of State is just now himself the President of the Council of Energy Ministers, and we understand that they are to meet again on the 29th of this month. It is hoped that they will reach a decision then. The front runner, if I can call it that, for the decision as to where to site the research centre for this major product is our own Culham, and, when he replies in a moment, I would hope that the noble Lord can confirm the Government's intention to press for a decision to site the research centre at Culham. May I add, in parenthesis, that the JET project is of course the project to generate electricity by means of nuclear fusion rather than nuclear fission, which is the system we are presently using.
So much for the general points. I should like now to take up one or two detailed matters that occur in the Bill. I hope that the noble Lord will be able to give me some guidance on them in a moment. First, we know from our background information, and the noble Lord confirmed this in his speech, that the British Nuclear Fuels Corporation still has a substantial quantity of money borrowed from the Consolidated Fund. The figure I have is of £28 million still outstanding. I want to ask the noble Lord whether he is satisfied that the rate of interest paid on those monies, which is only 5½, per cent., is appropriate in modern conditions.
722 The next point I was about to raise is one that the noble Lord emphasised and re-emphasised in his speech; that is, the question of the further acquisition of shares in the National Nuclear Corporation. I was glad to hear that there will be no compulsion on the existing shareholders to part with their shares unless they wish to and unless a price can be readily agreed. I must confess that at first sight that was a matter which gave me some concern. There are many other topics we could deal with in a general way in a debate such as this, but I do not propose to do so. We had a long debate not long ago on the Flowers Report in connection with the environment and waste. A little longer ago we dealt at length with the Atomic Energy Authority (Special Constables) Bill. It may well he that such matters will be raised by the noble Lord, Lord Avebury, when he speaks in a moment.
In general, we recognise the need for this measure which, as the noble Lord, Lord Strabolgi, has explained so clearly, increases the provision of funds for these companies within the nuclear industry. We regret that large additional quantities of public money are necessary, but we recognise the needs for it, and for that reason we shall be glad to see this Bill pass through into law.
§ 7.25 p.m.
§ Lord AVEBURY
My Lords, I shall try to copy the noble Lord, Lord Trefgarne, in his admirable brevity. May I begin by endorsing the thanks which he has given to the noble Lord on the Government Front Bench for the lucidity and comprehensiveness with which he has explained the provisions of this Bill. I only wish that we could have had a little longer to study it. I realise that there were background circumstances which required us to look at this Bill only three days after it left another place, but it makes it difficult for those of us who have been concerned with other Bills to turn our minds suddenly to the complex affairs of the nuclear industry and to do them justice at such short notice. To do them justice we should have to pay a considerable amount of attention to the provisions of a Bill which includes a possible increase of £500 million in the capital of BNFL, to say nothing of the provisions regarding Radiochemical 723 Centre Limited, which I think are entirely uncontroversial and to which I shall not refer further.
The noble Lord, Lord Strabolgi, will realise that not everybody is entirely happy about a large expansion of nuclear reprocessing in this country at a time when some of the technological, environmental and political problems are, to say the least of it, not immediately soluble even if some of them can at some time be solved. I should like briefly to recapitulate some of the problems that were mentioned by my honourable friend Mr. David Penhaligon in another place. First, the Atomic Energy Authority and BNFL have consistently maintained that in the long term they will be able to develop a process for vitrifying the high level radioactive wastes which are at present held in liquid form on the Windscale site. They further claim that, even if it was to be quite a long time before the vitrification processes were perfected, they could manage to store liquid wastes arising from our domestic nuclear programme in the area that is available at Windscale. Speaking from memory, I think we are talking about an area of no more than 8,000 square metres by the year 2000 to accommodate the whole of the liquid wastes that could arise from our own programme.
Nevertheless, they admit that it would be much better if one could store these wastes in a solid form, whereby the management of them, and the control of the heat arising from the continuing decay processes, would be much more readily accomplished. So they say that this is an essential component of the long-term programme which they are confident can be solved technologically. Without in any way doubting their assertions of confidence, I think that the layman would be happier if there could be a demonstration of that capability before these very large sums of money were approved, let alone spent. The Atomic Energy Authority have had very many years of research on the subject—I think that the Fingal project goes back to the late 1950s, and after that we had Harvest, and now no doubt there is a further stage in the development of the vitrification process—but we are still a long way from achieving commercial success in that regard.
724 The second point my honourable friend made—he dealt with this on several occasions during the proceedings on this subject in another place—was the question: What would happen to nuclear wastes not arising from our domestic programme but from the fuel which we are to process for overseas customers such as the Japanese and Swedes? I understand from the Secretary of State on Second Reading that we are not necessarily obliged to store the wastes arising from, for example, the Japanese contracts at Windscale, and that in certain circumstances we should be able to return them to the customers.
There are two questions I would put to the noble Lord about that, although I am not sure he can reply to them at this stage. First, how can we in fact guarantee that the contracts will include such a provision when presumably they are a matter for the day-to-day management of the BNFL rather than for the Secretary of State for Energy? I am not sure whether this matter is covered by the general direction powers of the Secretary of State. It is a difficult question and I accept that the noble Lord may not be able to answer it now. Secondly, I am concerned about the plutonium arising from nuclear wastes. As the noble Lord will appreciate, the point of the exercise is to extract from spent fuel elements which are returned to Windscale the components which it is possible to use as fuel; that is, uranium and plutonium still contained in the fuel elements.
On Second Reading the Secretary of State gave assurances--he repeated them on other occasions in another place—that any plutonium arising under these contracts with overseas customers would be subject to the "most stringent and careful safeguards". We already have stringent and careful safeguards because we are members of the International Atomic Energy Agency, but as the noble Lord will be aware, we and our allies who are members of that Agency are not satisfied with the existing safeguards; we say they should be strengthened and we as a nation are, according to the brief issued by the Department, taking a leading part in informal discussions with our friends to consider means for strengthening the control of plutonium, including the possibility of some form of international régime for its storage.
725 The question which arises, therefore, is this. Supposing it is not feasible for us to arrive at any agreement with our partners in the International Atomic Energy Agency and we still have large masses of plutonium arising from the contracts we have entered into with overseas customers? Will we return that plutonium to them? And supposing they do not abide by the additional safeguards which we evidently think are necessary? Will we divert this plutonium to our own use, which of course would imply using it in commercial fast breeder reactors, a technological development which we have not yet decided on so far as our own energy needs are concerned?
Then there is the question of the ultimate disposal of radioactive wastes. If we have a large programme of nuclear energy, we cannot continue to store them at Windscale for ever, although, as I said, the Atomic Energy Authority and the BNFL are satisfied with the facilities they have there up to the end of the century. We must make provision beyond that and the National Radiological Protection Board has only today issued a report on the feasibility of dumping these solid wastes finally on the ocean bed. I found the accounts of this report in the newspapers this morning rather misleading because they purported to show that this problem was virtually solved by the NRPB's process research, whereas if one reads—I have not been able to obtain the whole report; it was not in the Library—the article by Paul Grimwood and Geoffrey Webb, who work at the NRPB, in today's New Scientist, one reads that the broad conclusion drawn from their study is that a great deal of additional work has to be done to solve some of the uncertainties that have been identified. They say:These uncertainties need to be substantially resolved before the disposal of high-level radioactive waste on the ocean floor is acceptable.Thus, the point made by my honourable friend in another place still remains; we are undertaking this very large expansion of a reprocessing capability without having solved the difficult problem of what to do ultimately with the material that arises from the plant.
A question of which I have given the noble Lord notice is about the circum- 726 stances in which the guarantees that he mentioned would come into operation. The guarantees, we have been told in the brief—Ministers have reaffirmed this in another place—are not guarantees of performance; in other words, that the Government would ensure repayment of advances if the plant is built but does not work. That is not what the guarantees are for, and such operational risks, equally, are not going to fall on the BNFL. Thus, the question that was asked by my honourable friend and by Mr. Nigel Forman in another place was simply on whom those risks would fall. If—customers having made advance payments for the reprocessing of their spent fuel—when the plant is finally constructed it is, for technical reasons, inoperable, on whom does that risk fall? Who must repay the advances which the BNFL are holding from customers?
In connection with the guarantees, the Americans have been extremely concerned about the growth of reprocessing facilities. Indeed, before the presidential election President Ford was expressing great anxiety about the avoidance of proliferation which, he said, must take precedence over economic interests. For that reason he announced in October 1976 a three-year moratorium on nuclear fuel reprocessing in the United States, fie said on that occasion that the United States should no longer regard the re-processing of used nuclear fuel to produce plutonium as a necessary and inevitable step in the nuclear fuel cycle and…we should pursue reprocessing and recycling in future only if they are found to be consistent with our international objectives".I think that that policy is being continued by President Carter, and is probably being reinforced, because President Carter has been, I would say, perhaps more concerned about the possibility of United States reprocessing technology getting into the hands of nations overseas who might use it even less responsibly. The United States decided to withhold American nuclear technology from Brazil and, as noble Lords will be aware, there is some argument going on between the United States and West Germany, who would like to step in and take over this contract.
If the United States have come to the conclusion that expansion of reprocessing 727 should be very limited and they are not going to do any themseleves, they might well seek to impose a ban on the transfer of nuclear material originating in the United States, and having been used as fuel in a country such as Japan, to Windscale for the purpose of these contracts. I am not sure what the international legalities of this matter are, but I understand that it was one of the reasons why there has been considerable delay in coming to a decision on those contracts with the Japanese. Obviously we cannot oppose this Bill here as we did in another place, but I must confess that, in spite of the debates that have taken place there, some considerable anxieties still remain in our minds and we should be most grateful for anything that the Minister can provide to resolve them this evening.
§ 7.41 p.m.
§ Lord STRABOLGI
My Lords, I am very grateful to both noble Lords for taking part in this debate, particularly to the noble Lord, Lord Trefgarne, for his constructive speech, and to the noble Lord, Lord Avebury, for the very important matters that he has raised. The noble Lord, Lord Trefgarne, asked me a number of questions which I shall do my best to answer first. He asked me first which type of reactor we should eventually decide upon. The design and development work were undertaken by the Nuclear Power Company, which completed and submitted the reference design documentation to the generating boards last June. The Atomic Energy Authority then advised the Government that this was an appropriate point at which to take stock of progress with the SGHWR programme. The AEA recommended that, for a variety of reasons, the SGHWR looked less attractive than it had seemed two years before and said that, on balance, it was its view, the SSEB dissenting, that the programme should be replaced by AGRs or by pressurised water reactors. The Government have not yet reached a view on this advice. The Secretary of State has agreed to a proposal that NNC should carry out a six-month assessment of the SGHWR, AGR and PWR systems on the clear understanding that this will not jeopardise the nucelar industry's ability to start work on site on an SGHWR early in 1979. The Government are not committed to accepting the outcome of this 728 assessment, but it should provide a firmer basis on which to reach a decision on the future of the SGHWR programme.
The noble Lord, Lord Trefgarne, also asked me about JET. The Joint European Torus, which is known as JET, is planned to be the centrepiece of the European Community's thermo-nuclear fusion research programme and it is estimated to cost about 135 million units of account to construct over the next four years. The main outstanding decision on JET is the choice of site, and we have had Starred Questions on this from time to time in your Lordships' House. This is on the agenda for the Council of Research Ministers next Tuesday, where we shall continue to press, as the noble Lord, Lord Trefgarne, asked me to confirm, the outstanding merits of the United Kingdom's candidate site at Culham near Oxford.
The noble Lord also asked me to clarify a point about the capital structure and the loans to BNFL. I am glad to have this opportunity to describe it a little further. The loans made to BNFL from the Consolidated Fund shown in the company's accounts as hearing interest rates of 5½ per cent. and 9½ per cent. were transferred to the company from the AEA when the company was set up in 1971. The loans at 5½ per cent.—all of which date back to before 1965—were transferred to BNFL at the interest rate that they bore when they were held by the AEA's trading fund. When the company obtained a further £10 million from the National Loans Fund during 1976, the interest rate on that was the rate prevailing at the time. There is no question of a subsidy to BNFL. These loans merely bear the interest rates fixed when they were issued.
Finally, the noble Lord, Lord Trefgarne, asked me for an assurance on NNC share acquisition. As I said in my opening speech, the powers to be given under the Bill are not in any sense powers of compulsory acquisition and there is not a power to nationalise. There is therefore no question of acquiring shares under this power against the wishes of their owners. It goes without saying that if this or any other Government were ever to wish to acquire shares by compulsion in the future, further legislation would he required. I confirm that we have no proposals of this kind.
729 The noble Lord, Lord Avebury, dealt more with the environmental side of this matter, which I thought made for a very good balance in the debate. He raised a number of questions, asking me first about Windscale. As I said in my speech, this is of course the subject of an inquiry. I agree that there has been considerable public concern about the effects of Windscale operations on the health of those who work on the site and those who live in the area. It has been suggested that exposure to sources of radioactivity, including plutonium, causes a high incidence of blood cancer and similar diseases. In fact, comparison of mortality rates for Windscale employees and pensioners with the average for the population as a whole does not give any support to that theory. Statistics for West Cumbria as a whole do not indicate an excess of these diseases in the area.
With regard to the recent incidents at Windscale, I have nothing to add to the reports made to the House recently. However, it may be useful if I refer the noble Lord, Lord Avebury, to the last Statement made by my right honourable friend the Secretary of State for Energy, who said on 15th December that he wished to inform the House that the Nuclear Installations Inspectorate had informed him yesterday that,over the last year routine monitoring at Wind-scale has revealed detectable levels of tritium on the beach. Investigations by British Nuclear Fuels Limited, in consultation with the Department of the Environment, and NII have not yet established the source of the tritium, but cannot rule out that it may have come from the silo which is the possible source of the recent seepage of radioactive water. I am advised that the tritium level on the beach is well below that permissible in drinking water and constitutes no hazard to employees or the general public."— [Official Report (Commons W.A.), 15/12/76; col. 716.]The Secretary of State will be reporting again to both Houses when its source is established. Meanwhile, the Government have asked BNFL to ensure that the unions on the site, the local authority and members of the local liaison committee are informed.
With regard to vitrification, early research work on the solidification of high-level liquid waste carried out at Harwell in the late 1950s and early 1960s demonstrated the feasibility of using a 730 one-step vitrification process. The present programme of work which commenced in 1973 is aimed at developing this process to the industrial scale for demonstration by the mid-1980s. This project is now at such a stage that its successful conclusion can be confidently predicted.
Through its membership of United Reprocessors and its contacts within the United Kingdom, the company has access to work on other forms of solidification of waste being undertaken overseas, in particular in France, which has already been taken to the prototype stage. British Nuclear Fuels Limited would not hesitate to adopt an overseas process if it became clear that this had advantages or that it would be available sooner than its own processes.
With regard to ultimate disposal, to which the noble Lord referred, several options are available. After vitrification, it could be disposed of to stable geological structures; into suitable ocean deeps; or by burial under the ocean floor. The noble Lord also referred to the announcement on the radio this morning that the National Radiological Protection Board was asked by BNFL to examine the idea of using the seabed for final disposal of the highly active wastes from reprocessing spent nuclear fuel when they have been vitrified. The report suggests that there are sufficient indications that the ocean floor should not be ruled out as a possible site for the disposal of high-level wastes, but there should be further evaluation of the subject in the coming years. Research work has indeed demonstrated the feasibility of the vitrification process.
Turning to the question of guarantees, I appreciate the noble Lord's concern that the guarantee of refund of advance payments should not involve a loss to public funds if the plant on which they have been spent does not work. However, the Government have already made it clear that the proposed reprocessing contracts will put this technological and operational risk on the customer, not the company. With regard to safeguards, I should say that safeguards means a system designed to ensure by means of accounting control and independent international inspection and verification that nuclear materials are not diverted to nuclear weapons or other nuclear explosive devices.
731 In regard to the United States, the noble Lord raised an interesting point. He also asked about the implications for the Japanese contract of US and other international restraints on the shipment of irradiated fuel. It is usual for nuclear fuel to be supplied subject to a requirement that it will not be transferred by the recipient to another country without the supplier's authorisation. This is the only international restraint on the transfer of spent fuel from Japan to the United Kingdom for reprocessing. This requirement is not new, and authorisation has never been refused for transfer to the United Kingdom. The Government of the United States are currently reviewing the conditions under which their authorisation for transfers is granted, against the conclusions of their recent review of nuclear export policy—
§ Lord AVEBURY
So, my Lords, is it conceivable that the Americans, at the end of this review, might come to the conclusion that fuel originating in the United States and being used in Japan was to be prohibited from being reprocessed in the United Kingdom? I agree that that would cause some diplomatic "agro" between Britain and the United States, but they might conceivably feel strongly enough about it to impose such a restriction.
§ Lord STRABOLGI
My Lords, much international work is being done to strengthen non-proliferation arrangements. There is no reason to believe that this will not be successful. The noble Lord has raised an important point, and of course we and all other Governments have this very much in mind.
Finally, the noble Lord, Lord Avebury, complained about the urgency and the short notice with which the Bill was set down. It completed its passage in another place only on Monday. This timetable, which I entirely accept was short, was agreed through the usual channels. It was forced upon us by the terms of the Parliament Act. As your Lordships are aware, this is a Money Bill, which we are expected to pass within a calendar month, and for most of that period we shall be in Recess. I therefore apologise to noble Lords for the short notice that there has been to deal with the Bill, but I do not think that it has in any way 732 stopped us from having a first class debate. I am most grateful to the two noble Lords for taking part in it.
§ On Question, Bill read 2ª: Committee negatived.