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Mr. Peter Rost (Erewash) : I have been following very carefully the hon. Member's arguments and those of his colleagues. Can the hon. Member explain what motive there could possibly be for the new area boards and distribution companies not to shop around through the grid for the cheapest possible supply, but to do as he suggests--up the price? Surely the whole purpose of the structure that the Government propose is to give the new distribution companies the opportunity to buy in from the cheapest possible sources. What motive could they possibly have for doing otherwise?
Dr. Howells : I thank the hon. Gentleman for his question. It is a good one because it affords me the opportunity to say that I believe that this Bill will allow the distribution companies to acquire power stations and, thereby, begin to control the local areas, not just in terms of the sale of electricity but in terms of its generation. It seems to me that in those circumstances the customer will be in very big trouble indeed. There will no longer be a chance to regulate supplies and costs. What we will have is an enfranchised monopoly, a private monopoly, over which we, as representatives of the customers in those areas, will have no control.
Mr. Michael Spicer : The hon. Member for Cardiff, West (Mr. Morgan) opened his speech by saying that we had kept the grid neither in the public sector nor fully in the private sector. He made that point as a matter of criticism of the Government. Another way of looking at it is through our eyes. We have given the industry the benefits of privatisation--for instance, employee involvement in shares, Companies Act accounts, and motivation to efficiency. That is why we cannot accept amendment No. 161, which would result in the grids being kept in the public sector.
Column 654them in the way that I have suggested-- something that would be denied to them by the Labour party and, in particular, by this amendment.
On the other hand, we have provided for the benefits that undoubtedly accrue from an integrated network. The Opposition--this is a new one ; as a matter of fact, it is one of the first new things to have come up tonight-- apparently want us to provide for a market-making capacity, a monopolistic buying capacity. The hon. Member for Pontypridd (Dr. Howells) was particularly enthused about that. On the other hand, we are concerned to allow the grid company to be a common carrier. That is quite specifically what we wish it to be because it is central to our concept of competition amongst generators.
The hon. Member for Cardiff, West asked--I think he was asking, though perhaps he was just making a statement ; in any case, I took it to be some sort of question--whether or not, and how, we would be retaining any aspects of the merit order despatch arrangement. Certainly the hon. Member for Wentworth (Mr. Hardy) raised this question. Quite manifestly, the answer is yes, and it will be done on the basis of bid prices into the generator pool. Of course, that will be done regardless of who owns the station. It will be a matter of encouraging those who are able to come forward with the best bid prices to do so and, as a result--subject to the stability of the system which, of course, will remain the responsibility of an integrated network company--they will be able to sell their wares through the common carriage arrangements that the network will provide. We do not see that there will be any problem about this, other than in the minds of those who wish to see some sort of monopolistic situation being returned--in this case, through the operations of the grid company.That is precisely what the whole thrust of this Bill is aimed at avoiding.
The hon. Member for Cardiff, West made a quite legitimate and proper point in saying that the non-fossil fuel obligation intervened and distorted, to an extent, the workings of this competitive regime to which I have alluded. We have never, in any way or at any point, disguised from the House, or from anybody else, the fact that the non-fossil fuel obligation is, of course, a distortion in the market place. We hope that that distortion will be temporary as the nuclear levy becomes unnecessary. On many occasions we have told the House why we wish to have part of the electricity in this country provided by nuclear power, and I do not intend to weary the House by going over the argument again. The reason why we want a nuclear industry is fully on the record. On that basis I defend the undoubted distortion which will exist in a minor way under the competitive regime that we are presenting to the House. There is no way that we wish to accept the amendments and on that fair, cogent exposition I hope that the hon. Gentleman will feel able to withdraw his amendment.
Mr. Morgan : I shall respond in like manner. The Minister is slightly wrong : regardless of his exposition I shall withdraw the amendment in the hope, possibly a vain one, that the other place will attend to these matters with its greater ability to think independently.
The Minister's reference to preserving the best aspects of the merit order system under the new contract system is phoney. Mr. Montague of Linklaters and Paines, one of
Column 655the leading solicitors firms in the City that are looking into this on behalf of the industry or the Government--I forget which--is one of many who has said :
"Profit is likely to be included in capacity charges rather than energy charges."
Mr. Montague said that at The Economist conference on electricity privatisation before Christmas. In other words, before any generator submits his generating station into the merit order pool, he has already made his money in the contract simply by being there. In that case there is no incentive for him to reduce his unit cost or for the national grid to buy from his generator because its unit cost is low.
Although we fully maintain our arguments and strongly reject the Government's arguments, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
rights to receive any sums by way of repayment supplement and'.
Mr. Lang : Amendment No. 66 is a technical amendment. Its purpose is to ensure that any repayments of corporation tax which might turn out to be overpaid would also be accompanied by repayment supplement due as a result of those repayments.
Amendment No. 88 is a technical amendment to remove any doubt on the effect of paragraph 8 of schedule 11 which was inserted in Committee. It is designed to ensure that tax allowances transferred from one company to another can be utilised by the second company. Amendment No. 87 is a drafting amendment.
Amendment agreed to.
Amendment made : No. 67, in page 108, line 1, leave out by' and insert in pursuance of'.-- [Mr. Michael Spicer.]
to the Scottish companies--
Amendment made : No. 68, in page 52, line 32, leave out in Scotland'.-- [Mr. Michael Spicer.]
Amendments made : No. 69, in page 54, line 25, after of' insert (a)'.
No. 70, in page 54, line 26, leave out from Wales' to end of line 28 and insert
(b) sums issued under section 73 above in fulfilment of guarantees given in respect of loans made to such companies,
shall not exceed £2,000 million.'.
Column 656No. 71, in page 54, line 32, leave out
in fulfilment of guarantees under section 73 above'
under section 73 above in fulfilment of guarantees given in respect of loans made to successor companies in Scotland'. No. 72 in page 54, line 34, leave out subsection (3).-- [Mr. Michael Spicer.]
(a) the same document contains listing particulars for securities of two or more successor companies ; and
(b) any person's responsibility for any information included in the document is stated in the document to be confined to its inclusion as part of the listing particulars for securities of any one of those companies,
that person shall not be treated as responsible for that information in so far as it is stated in the document to form part of the listing particulars for securities of any other of those companies.'.
Amendment agreed to .
Amendment made : No. 74, in page 55, leave out lines 14 to 17 and insert--
"responsible" means responsible for the purposes of Part IV of the 1986 Act and "responsibility" shall be construed accordingly.'.-- [Mr. Michael Spicerr.]
Amendments made : No. 87, in page 111, line 37, leave out may' and insert shall'.
No. 88, in page 112, line 6, at end insert--
(5A) The trade carried on by a company whose liabilities are extinguished by virtue of section 74(1) of this Act shall, if the company's tax losses are aggregated and apportioned by virtue of sub-paragraph (2) above, be treated for the purposes of giving any relief under the Corporation Tax Acts in respect of the losses so apportioned as being, and having at all times been, the trade carried on by the successor companies to which the losses are apportioned.'.-- [Mr. Lang.]
((2)) (1) The Secretary of State shall lay before each House of Parliament additional directions for the purpose of--
(a) preserving the security of building or installations used for, or for purposes connected with, or arising from the generating of nuclear power ;
(b) mitigating the effects of any civil emergency that may occur as a result of the generation of nuclear power or any matters connected with or arising from the generation of nuclear power.
(2) in setting the directions under ((2)) (1) above the Secretary of State shall consult with the relevant local
Column 657authority ; with the corresponding health authority or board and with representatives of police, fire and ambulance services. (3) "relevant local authority" in ((2)) (2) above means the local authority in whose area the building or installation is situated ; the local authority through whose area radioactive material may be transported and the local authorities whose area is within 25 miles of the building or installation.
(4) personnel provided for the security of a building or installation under this subsection to prevent terrorist or other attack shall be the responsibility of the the Secretary of State and shall not be provided by firms providing private security services whether employed by the licence holder or any other body or person.'.
The amendment specifically relates to the issues of security and safety at nuclear installations following privatisation. That has been referred to in previous debates and is an important issue. The amendment addresses several specific points.
The first part of the amendment is concerned with the security of buildings and installations associated with the generation of nuclear power. It then deals with mitigating the effects of an emergency. It provides for the co- ordination of an emergency plan with the relevant local emergency services and the notification of local authorities within a 25-mile radius of the building or installation. The final part deals with the security services associated with protecting nuclear installations against terrorist attack and requires that the provision of such security shall be the responsibility of the Secretary of State and shall not be sub-contracted to private security firms.
United Kingdom provision for the security of installations and for nuclear emergencies is not nationally co-ordinated or agreed, or well publicised. Nor does it compare favourably with nuclear installations in other countries. The requirement on nuclear power station operators is concerned only with on-site security and an evacuation planning distance of 3.5 km. Clearly, that does not take account of the possible implications of a significant fall-out of radioactivity. I have been advised that the evacuation distance is 16 km in the United States, 20 km in Finland, 10 km in Germany and between 12 and 15 km in Sweden. Only Mexico operates a smaller radius than we do, at 3 km, and the British Government should not be particularly proud of being marginally better than Mexico.
The main problem is caused by the lack of overall guidelines. It is left to each individual installation. There is no general understanding among the emergency or neighbouring authorities of exactly what is required. I am advised that Somerset county council has taken steps to ensure that there is a well-publicised plan for emergency evacuation of its nuclear installations and that it is available to the public. That is a desirable example which could usefully become the basis for the norm. It has happened only because the county council has initiated such a proposal and because it has managed to secure the voluntary co-operation of the authorities at Hinkley Point. To be fair, they get a good deal of criticism. The fact that they have co-operated is welcome.
The amendment seeks to make it a statutory requirement for this type of plan to be in operation in every circumstance and to make specific proposals for the involvement of the relevant authorities. It should go without saying not only that there should be a plan, but the emergency services, which are likely to
Column 658be most immediately affected in the neighbourhood, should be consulted in the formulation of the plan and fully informed about what the plan is. The fact that that is not the case is a matter for considerable alarm and shows unjustified complacency. No matter how good we may feel the safety and performance record of British installations is, we cannot rule out human error and the fact that there could be an accident. Indeed, there have been sufficient minor incidents-- fortunately, in most cases, minor--to make it clear that we must have much better provisions and contingency arrangements for preparing for the possibility of a major disaster.
I do not wish to detain the House longer than is necessary, because some of the arguments have been covered when discussing previous amendments. I believe, however, that the amendment is more specific than the previous ones and shows how we should deal with the problem.
I make no secret of the fact that one reason why I have been a persistent and long-term critic of the nuclear power industry has been that, from the days of the previous Labour Government, it has been a requirement to provide armed police to guard nuclear power installations. That begins to bring into question civil liberties. Of course, I accept that those installations are targets for terrorism and need to be protected, but I believe that the House should consider how that protection will continue when the nuclear installations have been transferred to the private sector. That is not just idle speculation. A number of private security agencies are involved in the surveillance of people connected with or critical of the nuclear industry. It is a specific concern of mine that such a body as Zeus Security Consultants, now known as Securipol, could possibly be charged with actually carrying out the protection of those installations. If that were the case, it would effectively mean privatising not just a significant and important policing operation, but an armed policing operation. [Interruption.] The Government may want to privatise the police. However, I believe that we are in dangerous waters if we are suggesting that private nuclear power station operators should be free to contract with private security services to protect those installations. We could be faced with the possibility of a private company providing armed police and using security and surveillance methods that are more associated with counter-espionage than with normal policing operations.
It is no secret that this issue has been raised previously, but I do not apologise for mentioning it again. A couple of months ago my right hon. Friend the Member for Yeovil (Mr. Ashdown) and others tabled an early-day motion drawing attention to the involvement of Lord Chalfont in just one of those agencies. It remains the view of my right hon. Friend and my colleagues that being chairman of the Independent Broadcasting Authority is incompatible with being an active director of a company that carries out what I believe are rather unsavoury security and surveillance operations. Evidence--as recently as last week on Channel 4--has shown that the methods of operation of such companies are extremely dubious.
There have been a number of revelations in the House about our state security services and their failings, but the idea that we should be licensing and, indeed, providing a market for private organisations of this character to be able to develop and expand is unacceptable.
Column 659I hope that the Minister can assure us that the security of nuclear installations in the private sector will remain the responsibility of the Secretary of State. If any armed personnel are involved in the protection of those installations--which presumably will continue to be necessary, as that has been the case for at least the past 15 years--they should be employees of the state and not of any private organisation.
The amendment covers a number of different, although relevant and related matters. Do the Government propose to bring forward co-ordinated strategic plans for dealing with any emergency at a nuclear installation, dealing with appropriate evacuation procedures and informing the public and the relevant authorities, especially the emergency services and the local authorities?
If the Minister does not agree to the notification of a 25-mile radius, will he say what kind of evacuation radius the Government think appropriate and how far around it the relevant emergency services and authorities should be involved?
I am prepared to accept that the amendment is open to interpretation, but we need to know more than we have been able to discover so far from the Minister. We cannot simply allow the public to accept assurances from the industry--they will not accept them in any case--that we are much safer and better at operating nuclear power stations than are any of our competitors in any other countries and that we do not require further safety procedures. That is the current state of affairs.
Before the installations are transferred into the private sector we need a clearer statement on what the Government propose to do about emergency and evacuation procedures involving the relevant authorities. I hope the Minister can also give me an assurance that any armed security personnel involved at any nuclear installation will be directly accountable to the Secretary of State and through him to this House.
Mr. Hardy : Many of the security firms pay very poor wages and I am not suggesting that Lord Chalfont is subject to such wages. I have heard of people on £1.50 an hour--that is reason enough to suggest that Lord Chalfont is not included in that particular group. However, there are social dangers in giving people so little money. I am worried if such firms recruit people on a part-time, casual basis. It might be profitable for employers to leave us in a state of dependency on that sort of casual labour, but that is almost as questionable as some areas of the black economy that are causing concern. The Minister needs to give the House some assurances about that.
I know it is fashionable to talk about the modern bugging to which the hon. Member for Gordon (Mr. Bruce) referred a moment ago. Such bugging may provide massive profits for technologically advanced security firms. I am chiefly concerned about the people who will run the security of privatised nuclear power stations, perhaps for many years to come. For us to be dependent on such outfits gives us cause for concern and may well create a nasty taste in the mouth.
Mr. Michael Spicer : The nuclear installations inspectorate, through its licensing powers under the Nuclear Installations (Amendment) Act 1965, already requires that nuclear generators draw up emergency plans to deal with any nuclear accidents in full consultation with the relevant local authorities and emergency services.
Column 660The lack of formal responsibility on local authorities to produce emergency plans for nuclear installations of the kind that exist under the Control of Industrial Major Accidents Hazards Regulations for hazardous chemical sites has been noted by my Department. It has been decided to deal with this by making use of powers available to the Health and Safety Commission and by placing a legal requirement on local authorities to prepare the kind of integrated off-site plans for licensed nuclear sites for which the hon. Gentleman has properly called.
The House may like to note that the intention is to go beyond the normal requirements for reference accidents, which is the basis for the existing CIMAH regulations. In the case of nuclear sites, the off-site plans will be required to address the availability of contingency plans to provide for a capability to deal with nuclear accidents which have more widespread effects than the detailed site and off-site plans are designed to cater for. I hope that the hon. Gentleman will be reassured on that point, to which his amendment is appropriately addressed. Legislative help is on the way regarding the integration of plans.
The power proposed in paragraph (1A) of the amendment is already covered by clause 89(1)(a) which enables the Secretary of State to give directions about the security of nuclear power stations. That is a recurring theme of my response to the hon. Member for Gordon (Mr. Bruce). However, it would be quite inappropriate for the Secretary of State to undertake wide consultations on matters involving counter-terrorist measures because it would be impossible to preserve the confidentiality of the proposed measures. For that reason, the Secretary of State will have the discretion not to lay directions before Parliament if that would be against the interests of national security. The hon. Member for Gordon conceded the vital importance of preserving power stations from any potential attack by terrorists. I shall turn to the point made by the hon. Member for Gordon-- addressed by the hon. Member for Wentworth (Mr. Hardy)--that in his view, and this was mentioned in the amendment, there should be no role for private security companies. We cannot accept that. Security matters are the responsibility of those running the power stations, with the proviso that the Secretary of State has the capability to make directions. That fall- back exists throughout the clause ; in fact the purpose of the clause is to give him ultimate responsibility to make directions. We do not see why it should not be possible for those with responsibility for security of power stations to use private security contractors should they wish to do so.
The hon. Member for Wentworth mentioned low wages. The headquarters of one of the largest security companies in the country--Group 4 Total Security-- is in my constituency. Therefore, I am aware of the industry's structure, benefits and problems. However, I cannot give the assurances about low levels within the industry which he seemed to seek. Those are a matter for negotiation between the companies and their employees. However, I agree that it is extremely important to maintain the highest standards within those companies, particularly when vetting personnel.
Mr. Hardy : Does not the Minister recognise that if a security company seeks to behave responsibly, pay reasonable wages, vet and insure its employees properly and do all that a model employer should, it is likely to be outbid by a firm that sticks up notices--of the sort that I
Column 661have seen in jobcentres--offering part-time employment for wretchedly low wages, has no capacity for the proper supervision of its workers, and does nothing more than bank its own large profits?
Mr. Spicer : If that is the case, such companies would be extremely short sighted, because they will put the security of their businesses at risk by employing cowboy operators of the kind suggested by the hon. Member for Wentworth (Mr. Hardy). Therefore, it is sensible for anyone employing contractors for security to ensure they employ those of the highest quality. No doubt, as a result, they will pay them properly for their services.
I concede the point made by the hon. Member for Wentworth that it is extremely important that companies should operate properly. However, we do not want to pass legislation to prevent nuclear power operators from using private contractors should they wish to do so. However, I stress the proviso that the Secretary of State retains--through the operations of the clause--powers of direction and therefore of ultimate responsibility for security.
On the basis of that explanation, I hope that the hon. Member for Gordon will withdraw the amendment.
Mr. Malcolm Bruce : I am still worried about the Minister's failure to reply to one or two points. Those who are involved with or concerned about the safety of nuclear installations--local authorities, for example-- are less than happy about the lack of a clear agreed national guideline, and they are still pressing the Department for one. I can genuinely understand--although I do not share this view--that the Government may believe that negotiating with the local authorities and emergency services and notifying the public who live near nuclear installations about evacuation and emergency procedures might create alarm. Against that, however, too many people who live near the installations have no idea of what they are supposed to do in an emergency and no chance of finding out if there is one. Given that a major disaster occurred a few years ago-- admittedly, and for this we are grateful, not in this country--I believe that the public would prefer the Government to be more honest and to encourage more discussion of this matter. They would regard it as a greater reassurance--
Mr. Michael Spicer : The hon. Gentleman is right to pull me up for not answering the point about the 3 km evacuation areas. That distance is not a hard and fast standard. The authorities frequently engage in much wider areas for evacuation exercises. I have taken part in an exercise that covered a much wider area. I can offer the hon. Gentleman that assurance.
Mr. Bruce : I am grateful for that assurance. Although I specifically referred to the involvement of local services in an area up to 25 miles away, that is not the point at issue. I accept that there may be reasons for variations in all sorts of circumstances. The lack of a national agreed scheme, however, gives rise to concern. Each installation must make its own plans ; those plans are variable, and I am less and less convinced from the evidence made available to me that they are all good and that local authorities and the people living in these areas are adequately informed and involved in the planning process.
Column 662I do not want to tempt providence, but if there were a serious accident in a British nuclear installation, the Government would be found wanting for not having ensured that enough information was given to the public who live in these areas.
The final point to which the Minister did not respond was my request for an assurance that any armed surveillance that might be required in these installations would be carried out by personnel who were accountable to the Secretary of State. Personal preferences apart, I can accept a legitimate role for private security companies in the security of nuclear installations, but I cannot readily accept the deployment of armed personnel who work in the private sector. It is most unfortunate that the Minister could not give me the assurance that I sought.
I cannot claim to be particularly happy with the Minister's response. If he cannot give me any firmer assurances, I shall withdraw the amendment, but only on the understanding that the issue will be raised again in another place--
Mr. Michael Spicer : I understand--if I am wrong, I shall publicly correct myself--that at present only the Atomic Energy Authority police in nuclear installations have the right to carry arms. That right was given them by legislation and will not apply to private companies.
Mr. Bruce : That was a helpful intervention and I shall not pursue the point further. I have made my point forcefully and clearly. I still believe that the Government should do more, and this matter will come up again in another place. In the meantime, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
(4) There shall be no grants payable under this Schedule save for expenditure in respect of extra costs that could not have been foreseen by the person concerned as at the date the Act takes effect.'.
Schedule 12 allows the Secretary of State to make grants or loans to the privatised industry for reprocessing nuclear waste, for storage or disposal of waste or for decommissioning nuclear power stations. The schedule seems to be open-ended in that all the bills for waste and decommissioning could be passed to the Government by the privatised industry. The critical phrase in the amendment is "extra costs that could not have been foreseen by the person concerned"
We are talking about grants and loans up to £2.5 billion and those could be renewed by order up to £1 billion at a time. We know that the costs at the end of the nuclear cycle could be quite heavy. The CEGB has reserves of about £3 billion set aside to meet those costs. The thermal oxide reprocessing plant project will cost £1.5 billion and the decommissioning cost for British Nuclear Fuels installations is about £4.5 billion. That has increased tenfold in the past year. The decommissioning costs of nuclear power stations are guesswork at the moment. The Government's guess of the cost is about £300 million. This year is the 10th anniversary of the disaster at Three Mile Island and
Column 663already over $1 billion have been spent trying to clean up that mess. The £300 million that I have mentioned is a minimum figure, but the true cost could be as high as £2 billion per nuclear reactor. There are nine Magnox reactors and seven advanced gas- cooled reactors. That means that 16 nuclear power stations have to be decommissioned. The minimum bill for that is £5 billion, but it could be as high as £30 billion.
The cost of disposing of waste is also the subject of guesswork. We do not know the cost of disposing of intermediate-level waste, and the technologies for disposing of high-level waste have not yet been developed. In Committee we talked about a figure of £4 billion, but the Government did not provide any figure.
As I have said, it is clear that the schedule is open ended and all the bills could be passed to the taxpayer. We could have the intolerable situation of the privatised industry being allowed to make a profit and passing the big bills at the end of the nuclear cycle to the taxpayer. In Committee the Minister told us that the provisions referred to unforeseen costs. I have gone minutely through the schedule and can find no mention of unforeseen costs. The Government need to specify exactly what costs they expect at the end of the cycle. They should specify the foreseen costs and the unforeseen costs. That should be done in the interests of would-be shareholders in the privatised industry and in the interests of taxpayers, the electorate, whose industry is being privatised. We know that there is terrific concern about these issues in the City and the industry. In a newspaper article a month ago, it was pointed out that the electricity sell -off could flop over the nuclear waste issue. The article said that John Bates, the managing director-designate of National Power, which will have responsibility for nuclear power, had suggested that a public chest should be set up to carry the costs of decommissioning. The CBI is so concerned about the problems at the back end of the cycle that it does not want nuclear power to be privatised.
The purpose of our amendment is to make the Government pin down what costs will be covered by the schedule. We feel that it would be only costs that are not foreseen by the directors of the privatised industry. That was the spirit of the discussion that we had in Committee, and we are asking the Government to put into words the spirit of their reply in Committee. The Government cannot but accept the amendment. They gave us the message that the schedule was meant to cover unforeseen costs. Therefore, not only my hon. Friends but the Government must accept the amendment.