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We were told that BNFL has been criticised for accepting contracts that made the United Kingdom a dumping ground for nuclear waste. The Committee strongly supports what BNFL is doing and believes that it is doing it well. There are some aspects of costs, with which I shall later deal, but BNFL's technical capacity is undoubted. We understand that it is immensely profitable for BNFL and for the United Kingdom for BNFL to do this work. However, we call, I think with some justification, for circumspection or caution over contracts that allow the United Kingdom to become, in the words of the Committee, "a repository for waste generated abroad."

That was a deliberately low-key phrase and I emphasise the low-key intention of the Committee in reporting it in that way. The reason for that is that BNFL cannot handle it safely and profitability in the public relations sense if the public perception of all the problems surrounding the storage and proper technical handling of nuclear waste are such that the appropriate solutions cannot be adopted for what has often properly been called the "not in back my backyard" syndrome. That is a powerful syndrome when it comes to dealing with anything in the nuclear industry. It is because this public perception of the risks involved is seriously flawed that the Committee reached the conclusions that it did. We have advised caution.

In terms of radiation we all live on one planet. It is in the interests of the whole human race for nuclear waste to be skilfully handled by those who have the technical competence to do it, and not many have. About three or four major countries can do it and nothing would be more disastrous than to encourage countries that do not have the skills or technologies to set out on their own.

BNFL believes that we have been inaccurate in referring to very large price increases. That brings me to the point made by my hon. Friend the Minister. BNFL quoted Drigg in its press release this morning. Let us look at the facts. All these are taken either directly from BNFL's evidence or from the evidence that the Committee received from the Central Electricity Generating Board or the South of Scotland electricity board. I shall give the first example by quoting from page 9 of our report.

Mr. Michael Spicer : In my speech I did not in any way criticise the Committee for its interpretation of the facts. I said that it concentrated on particular costs and that people outside then generalised on the Committee's arguments.

Sir Ian Lloyd : I am obliged to my hon. Friend and I accept what he says.

I shall now turn to the specific instances that justify my Committee's conclusions. On page 9 of the report the CEGB evidence suggested that in three specific areas the increases in price over a short period were 129 per cent., 20 per cent. and 27 per cent. On page 34 of our report there is a memorandum from the South of Scotland electricity board which drew attention to another area where the increase was 75 per cent. On page 36 the United Kingdom Atomic Energy Authority in its memorandum gave the amounts that Harwell paid BNFL for the disposal of low-level waste at Drigg. For the year 1985-86 the cost was £26 million, for 1986-87 it was £29 million, for 1987-88 it was £145 million and for 1988-89 it was £260 million. The

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percentage increases available from those figures are 10.8 per cent., 388 per cent. and 79 per cent. Those are dramatic increases. On page 37 of the report the United Kingdom Atomic Energy Authority pointed out that the decommissioning charge for 10 years had been estimated in 1986 at £85 million, but by 1987 it had gone up to £164 million.

I turn to BNFL's own submission to raise much more serious issues. Evidence was taken from BNFL by the Select Committee on 10 December 1986. It estimated the total cost for decommissioning the nuclear facilities in the United Kingdom at £143 million ; for Calder Hall and Chapelcross the cost was £30 million per station, and for the CEGB £60 million per station. When we considered the question again in 1987 the CEGB upped its estimate to £330 million and the evidence suggested that the figure lay between, at the most optimistic estimate, £185 million, and, at the most pessimistic, £1,000 million. My Committee recommended that the CEGB clarify its costings. Meanwhile, roughly at the same time, the Select Committee on the Environment reported. I shall return to that because the inference of its report has been quoted in defence, understandably, by BNFL. BNFL's own figures appear in annex 1 on page 27 of our report. They show that the total liability for decommissioning has grown from £438 million to £4,605 million. Those figures are my major concern. I wish to examine them. The Select Committee has sought, and will be seeking, more information on them.

I should like to give the House a benchmark by which we can perhaps validate my and other judgments on the matter. The Organisation for Economic Co-operation and Development produced an extremely interesting report in 1986 on the decommissioning of nuclear facilities. What comes out of it is an interesting range of costs for decommissioning what one might describe as standard pressurised water reactors and boiling water reactors. It is £140 million to £150 million per reactor. The figures are available for anyone who would like to see them.

The most informative analysis, which is also contained in that report, is from the United States, understandably, because that country has the largest civil reactor industry. Therefore, its analysis is most complete. Here we find some extraordinarily interesting information. The surplus facilities management programme of the Department of Energy in the United States plans to decommission 350 nuclear facilities over 20 years from 1986 to 2006 at a cost in total of $1.4 billion, or roughly $4 million per facility. The 1986 United States budget provision for that was a mere $56 million.

There are three other interesting figures. The stabilisation of uranium tailings piles is to cost a total of $745 million, or $30 million per pile. The West Valley reprocessing plant will cost $136 million to decommission. The Shippingport reactor, which is the world's first commercial reactor to be decommissioned, will cost $98 million.

Now I come to a very interesting table which sets out the total picture for the United States. We glean the following facts from the table. There are 77 reactors in a large sample, of which the costs of 65 are known and the costs of 12 are unknown. The total known cost of decommissioning that large amount of nuclear power is estimated at $3.7 billion, or $57 million per reactor. If we take an average of $57 million for each of the 12 plants for which no figures are known, we achieve a total cost for the

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whole of this major segment of the United States nuclear industry of $4.42 billion or--I deliberately translate it into sterling--roughly £2.6 billion. That is over the period from 1984 to 2119. It is remarkable that we should even be contemplating anything for 2119 when obviously no one here will have much interest in what is happening. I want to draw the attention of the House to the scale of that : £2.6 billion is roughly the cost of a major new nuclear facility such as Sizewell.

Let us turn to BNFL's figures for the United Kingdom. They have risen from £438 million to £4,605 million. That is a total of $7,800 billion at $1.7 to the pound. Now comes the crucial comparison. Let us consider the size of the respective nuclear industries in the United States and the United Kingdom. Because statistics are so often carefully selected by those who choose to achieve one result or another, I have deliberately taken three bases of comparison--the use of oil equivalent, that is, conversion of nuclear power to oil ; megawatts, electric capacity ; and terawatt hours. The figures for the first are 124 million tonnes and 11 million tonnes ; for the second, 101 million MWe and 14 million MWe ; and for the third, 455 TWh and 48.9 TWh.

So the United Kingdom has roughly one tenth of the United States' nuclear capacity and one third of the nuclear capacity which is summarised in the report of the OECD ; the decommissioning costs have been estimated at a total of $4.42 billion. That third is now forecast to cost $3.42 billion more than the total estimate for the United States programme, which is three times as great. That is an astonishing figure. It suggests that we are proposing to spend on decommissioning resources of the order of two Sizewells, the Channel tunnel or the Severn barrage. I use those figures to give the House an idea of the scale.

I come now to BNFL'S explanation. It says that it responded to a suggestion made to it by the Select Committee when it appeared before us that it should look more carefully at decommissioning costs. We certainly made that suggestion. BNFL would probably plead in its defence that it took even more seriously two suggestions by the Select Committee on the Environment. That Committee recommended that the industry should do better than the shoestring approach, and then said that the industry should really embrace the concept of a Rolls-Royce solution. It would be very easy to say, "Some shoestring"; I prefer to say, "Some Rolls-Royce".

The whole issue is complex, confused and, because of its scale, alarming. Britain cannot expect to agonise over the budgetary constraints, as we do in virtually every Department of state, and vote almost £4,000 million on the nod of the basis of the information that we have. That is why we must discover much more about the scope and cost of that programme and what raised the estimate by £4 billion.

As my Committee warned, the City's judgment of the whole privatisation procedure is bound to be affected by those figures. How can it be otherwise? Some months ago in the House I warned my right hon. and hon. Friends in the kindest possible way that I suspected that those costs would provide a major obstacle to what I believe they were trying to achieve. I cannot help but conclude that they will prove to be just such a major obstacle.

As to the carriage by air of plutonium, the Select Committee on the Environment made a specific recommendation, which I

endorse--particularly after Lockerbie. The Committee stated that that practice should

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be prohibited. Has it been prohibited? If not, has the whole question been considered? If it has been considered, what conclusion was reached? My judgment is that if plutonium is to be transported between this country and Japan, or to any other distant part of the globe, the only way that should be done is in a triple-hull, unsinkable ship escorted by a frigate. Even that would present certain dangers.

We are in a sense considering the long-term implications of our current nuclear industry, which could grow dramatically if, as a consequence of analysis of the greenhouse effect, the developed industrial world--all power-using countries--decides that there must be a significant increase in the use of nuclear power. If that occurs, all the known problems and the whole analysis on which they are based will become dramatically more important.

Public and other misconceptions will arise and grow naturally, and they will often be fed by vested interest groups of one sort or another. Sometimes, the public are fed those misconceptions with great irresponsibility. Nevertheless, those misconceptions must not be allowed to foreclose the nuclear option. That is why we must insist on the most accurate, verifiable information that can possibly be obtained, and that it be made available to the House, where it can be fully discussed. Where there is risk assessment, it must be thorough and realistic. There really is no alternative.

7.22 pm

Mr. Robert Maclennan (Caithness and Sutherland) : The hon. Member for Havant (Sir I. Lloyd) made an extremely important speech to which the whole House will have listened and, more importantly, will read with great attention. However, it must be said that this occasion is not wholly suitable for considering the wider implications of the Select Committee's important report. It is in a sense unfortunate that the debate follows within 24 hours of the report's publication. That may explain to some extent the phenomenon to which the hon. Gentleman drew attention--the emptiness of the Chamber this evening. The hon. Member for Havant rested his speech on the frail support of this relatively modest Bill--although one recognises that the terms of the Select Committee's report were specifically allowed by Mr. Speaker, and that is welcome. The hon. Gentleman began his speech by drawing attention to the consensus in all parts of the House that the nuclear industry is here to stay and that, whatever decisions may be taken about the commissioning of new power stations, we shall continue to be affected by it for many decades to come. The hon. Member for Rother Valley (Mr. Barron) concluded his speech on that important point.

The Bill deals with three principal, discrete matters--the first of which is the increase in British Nuclear Fuel plc's borrowing powers. That is to some extent a technical matter, but it allows one to raise the wider question as to whether the reasons for BNFL's increased costs are as have been stated by the Minister. I hope that the hon. Gentleman will comment on the argument made by his hon. Friend the Member for Havant about decommissioning costs. However, I realise that the Government must give a considered reply to the Select Committee's report and will not be able to answer in full this evening all the points that have been and will be made.

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I want to reinforce a question asked by the hon. Member for Rother Valley. So many questions have been asked that the Minister may be tempted not to deal with them all. However, he ought to say something about the extraordinary report that appeared in today's issue of The Independent of a proposal by a Ministry of Defence official that nuclear submarines could be scuttled as a way of dealing with the decommissioning problem. I hope that the Minister will reassure the House that such is not the Government's intention, because that solution is neither acceptable nor in accordance with our international agreements.

The first principal subject I want to address that is directly related to the Bill is the need for a commitment to long-term nuclear research and development, which arises directly out of clause 2. From 1 April 1990, the Health and Safety Executive will, under the terms of the Bill, assume responsibility on behalf of the Health and Safety Commission for managing certain nuclear safety research currently undertaken by the United Kingdom Atomic Energy Authority and financed by the Department of Energy. It is vital to have a long-term programme of nuclear safety research and development, and it is insufficient to contemplate fire brigade action-- turning out a task force of scientists and engineers to respond only when a nuclear safety problem rears its head. Instead, a dedicated team undertaking long-term research is needed, whose advice on safety matters would be immediately available if required, and whose foresight would ensure that sources of concern about nuclear safety are averted. That view was expressed by the House of Lords Select Committee on Science and Technology, which stated in volume 1 of its report of 22 December 1987, entitled "Research and Development of Nuclear Power" :

"Companies in commercial production often feel the need to cut back on activities that do not show immediate commercial returns. Long-term research and development is by definition such an activity, but it is nevertheless essential. If the privatised industry fails to make its own arrangements, the Committee believes that the Government should make arrangements for them. It is ultimately the Government who are responsible for the long-term security of the nation's supplies of energy. Privatisation does not change that."

Legislation, or at least firm Government policy, may be needed in the context of current plans to privatise the electricity supply industry in order to preserve intact vital long-term research and development programmes. The Minister spoke of a £20 million reduction in Department of Energy expenditure. All the Government propose is a change in the route by which funding from the industry reaches the authority. I fear that that direct use of industry money to fund research and development programmes may dangerously distort long-term safety research programmes, and starve vital projects of funds in that way.

My next point concerns an omission from the Bill that is both surprising and significant. I refer to the lack of any provision to make good a defect in the legislation under which the UKAEA handles contracts and consultancy work and the fruits of its research and development. The staff of the Atomic Energy Authority represent a unique national resource--comparable with our resources of coal, oil and gas. It not only founded a major industry in this country, providing half the electricity in Scotland through nuclear power stations but now it is increasingly

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expanding its non-nuclear research and development activities. It is able to offer the benefits of its research and development to British industry.

The authority should be able to derive full commercial benefit from the results of the research and development programme which it is permitted to carry out in non-nuclear areas. Its main enabling statutes--the Atomic Energy Authority Acts 1954 and 1986, and the Science and Technology Act 1965--restrict the ways in which the authority can pursue this commercialisation. It is not permitted to carry out non-nuclear manufacturing or commercial service activities based on its research findings, which is a major disadvantage. The Government have known of this for some time.

The House of Lords Select Committee on Science and Technology clearly saw this matter in the same light as I did. Volume 1 of its report on research and development in nuclear power says : "The UKAEA now operates on a trading fund basis. The Government wishes the UKAEA to be managed as far as possible commercially : but it proposes to continue the statutory restrictions which prevent the UKAEA from participating directly in the commercial exploitation of its expertise. The Committee feel this is inconsistent and they recommend that these restrictions be relaxed, providing there is no element of subsidy in tendering for commercial contracts." Why has the opportunity not been taken to include in the Bill that modification of these constituting Acts to allow the Atomic Energy Authority to engage in that commercial activity directly? It seemed the ideal vehicle by which to do so.

I shall turn to a wider, third issue--the Bill does not reflect a national policy or strategy concerning the generation of electricity from nuclear power stations. The atomic energy industry is in disarray as a result of the Government's disaggregation of the supply industry--proposed through privatisation and the setting up of new companies. Formerly, the Central Electricity Generating Board had taken upon its shoulders the business of formulating and promulgating a national strategy.

However, present signs are that National Power, the biggest of the companies in the disaggregated supply industry, is not prepared to take the same responsibility for formulating and promulgating a nuclear electricity strategy. The Government recognise this difficulty because they have ring- fenced the nuclear industry. However, that is a sterile, and inevitably temporary, measure. They define the industry as one which has the present size and type of nuclear installation, and offer no plan for adding to, or substituting for, those installations in a systematic way. That is sterile because, as Ministers have acknowledged, the ring fence will remain in place for only a few years. What will happen after that? Ministers have been vague about that in debates on the privatisation Bill. They seem to imply that nuclear power will have to stand on its own feet at the end of that period, or perhaps for 10 years. However, we all know what that is likely to mean--a process of erosion where, as reactors are shut down, they are replaced by whatever is the economic flavour of the day. At the moment, that would be stations fuelled by natural gas.

This is not a strategy, a policy or even a proper response to market forces in an industry in which planning and constructing a nuclear power station takes a decade, and the station may operate for half a century. A national energy policy is needed. Although I cannot expect the

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Minister, in replying to the debate, to outline such a policy, the fact that the debate is conducted in this vacuum is striking. The proposals in the Bill do little to show even the way in which Ministers are thinking.

The Minister will remember, because he alluded to it during debates on the privatisation Bill, the views of the County Emergency Planning Officers Society about the need for composite off-site emergency planning. I understand that, in November, the Department of Energy set up a liaison group as a national forum for considering public protection aspects of nuclear emergency planning. When the Electricity Bill was considered on Report, the Minister said that the lack of formal responsibility on local authorities to produce emergency plans for nuclear installations, such as exist for the chemical industry, had been noted. He said that legislative help was on the way for the integration of plans.

The Bill has not been chosen as the vehicle for such help. What prospects are there for such legislation? The Bill ratifies the international convention on assistance in the case of accident or radiological emergency. It seems odd that these further safety measures, which are certainly cognate with the convention, have not been included in the Bill. When will the Minister's deliberations be completed?

The Bill is broadly acceptable and its passage through the House should be supported. I hope that the fact that it has been linked tonight with some debate on the report of the Select Committee on Energy does not mean that this will be the sole opportunity for the House to debate the report of the hon. Member for Havant and his colleagues, because the subject that it covers goes beyond the ambit of the Bill, is important and should not be addressed in a short debate with the short notice that we have been given.

7.39 pm

Sir Trevor Skeet (Bedfordshire, North) : Having listened with considerable interest to my hon. Friend the Member for Havant (Sir I. Lloyd), I believe that he has adequately dealt with the escalation in costs. In defence of British Nuclear Fuels, I say only that it has had to maintain high standards, set by the nuclear installations inspectorate, and to deal with waste disposal to the satisfaction of the Select Committee on the Environment. A Rolls-Royce solution was much too expensive for the low level waste, but it seems to have adopted one. It has also done a remarkable job in cutting down effluent discharges. Those activities have, cumulatively, escalated its costs. In a press release it indicated that one of the principal increases was due to the additional expenditure at Drigg, which is understood.

Paragraph 51 of the report says :

"Under the new policy, the estimated current cost of

decommissioning all BNFL plant and facilities is £4.6 billion". A little further on it says :

"Despite this 58 per cent. reduction due to discounting, customers' liability for BNFL decommissioning costs has risen more than fivefold. Furthermore, BNFL's percentage share appears to have decreased significantly from approximately 23 per cent. to approximately 10 per cent. of the total."

That means that over the years money flows into the coffers which could be spent on new plant and equipment. It is paid now, but the liability for BNFL will come a long time later. BNFL has been able to spread some of the risk among its customers.

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That is one way of looking at the matter, but there is another way. In the Financial Times of 12 October 1988 it was reported that Dr. Harry Lawton, a former head of the laboratories at Sellafield, had said at an international conference that

"Decommissioning and disposing of nuclear power stations might cost the equivalent of up to 20 per cent. of the electricity generated over their lifetime."

The cost is enormous, and we must not overlook it.

Nuclear waste is another source of high expenditure. By the year 2000 the cost of disposing of the quantity of high-level waste, at £495,000 per cubic metre, will work out at £1.6 billion. The disposal of intermediate-level waste, at £18,000 per cubic metre, will work out at £1.08 billion. Because of the Rolls-Royce method of burial at great depth, used for low-level waste of which there is a vast quantity but which tends to be much lower in radiation, disposal will work out at £1.5 billion. The total bill for disposal of British nuclear waste will be £4.2 billion.

Those are big liabilities, and the policy has largely been to pass them on to customers. I agree with my hon. Friend the Member for Havant that the road ahead is nuclear, provided that we do not have to experience technological changes that may require a movement of resources. The way ahead, in my view, involves the fast reactor and, ultimately, fusion. But let us take a hard look at the costs and make them clear to the public.

On cost-plus trading, Mr. Harding said in evidence to the Select Committee :

"I am absolutely certain that we will be needing to look at different terms of trading with the privatised National Power, Power Generation and the Scottish boards. We did in fact take some initiative something like two years ago before privatisation was announced to open up discussions."

Why, if negotiations were started two years ago, has so little happened? I appreciate that the contracts cannot be completely renegotiated ; that would be too expensive, as paragraph 25 of the report makes clear. On the other hand, if it is open to BNFL to pass on most of its costs, that will not be in the interests of efficiency. I think that BNFL will have regard to that. Unless a complete answer can be found, the flotation will be greatly impeded. What man will put his money forward for the flotation of, say, National Power if he feels that some of the commitments are so substantial and uncertain that profitability could later be reduced? We considered that question in the Committee stage of the Electricity Bill ; indeed, I brought it up myself. It looks as though lavish expenditure will take place well in advance to ensure that the public are safeguarded against financial risk.

I am satisfied that THORP is a great concept. It has ample orders for the next 10 years, and hopes in the years after that to obtain orders from a number of countries in Europe and probably beyond. It will be able to do that only because the plant will be largely paid off and liberal discounts will be possible. But what are the likely prospects for the United Kingdom industry? What organisation in the private sector will build a nuclear power station above 300 MW? We have been told--we were told in Committee-- that at least four nuclear power stations are to be built : Sizewell B, which is in the course of construction ; Sizewell C, involved in a planning inquiry ; Hinkley Point C, which it is hoped will be available in 1998 ; and Wylfa, each with a capacity of 1,175 MW.

What will happen if the first is built and the second goes ahead? That will mean that we are not replacing the

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electricity derived from nuclear power. We now have Magnox stations with 4,793 MW and AGRs totalling 5,870 MW. That makes a total of 10, 663 MW. But there will have to be some retirements. The Magnox reactors which will be moving out in the 1990s have a capacity of 3, 500 MW. Hinkley Point B has a capacity of 1,120 MW, making a total of 4,620 MW. Replacements will be needed, and those replacements will be the new power stations to which National Power is committed, totalling 4,700 MW. If those stations are not produced, there will be no decommissioning or reprocessing at a later date.

I think that the Government have made a big mistake in not keeping the nuclear side in Government hands, where investment could be looked after carefully. I cannot see the private sector building nuclear power stations above 300 MW. I envisage the electricity from nuclear power stations falling from 20 per cent. of the total to between 10 and 15 per cent.

Mr. Maclennan : Earlier, the hon. Gentleman made the welcome assertion that he believed that eventually fast reactors and perhaps even fusion would be the basis of our nuclear programme. Does he base that belief on the expectation that at some stage there will be a change in Government policy? Is that what he is working towards?

Sir Trevor Skeet : I am entirely persuaded that the Government will change their mind later because they will have to do so. If the amount of electricity derived from nuclear sources is to fall, that will mean less work later for THORP. As I said, the whole logic of THORP was the reprocessing of the fuel elements from the newer stations--the advanced gas -cooled reactors and the pressurised water reactors--for two purposes. One was to recycle a waste product, to take out uranium which could be recycled in a way with which we are familiar. The other was to take out the plutonium, not simply to put it into store, but to use it in fast reactors.

What have the Government done? They say that there will be no fast reactors for the next 20 to 30 years and that we do not, therefore, need to spend such amounts on research. Thus one of the biggest planks for THORP has gone, unless it is brought back again. The Opposition need not be too jocular. Everyone in the United Kingdom is together in fighting the same problem. Some say that the money could be spent on other things, but dispensing with the fast breeder reactor is not in the long-term interests of United Kingdom energy policy or in the interests of the constituency of the hon. Member for Caithness and Sutherland (Mr. Maclennan), who has a local unemployment problem. It is much more important for the United Kingdom that we should carry on with the policy of developing the fast reactor.

We have the possibility of being able to use the plutonium in store, or we can keep the 26 tonnes in there for ever. I dare say a part of it could be used for military purposes, but not from the peaceful purposes stockpile. It was said in evidence to the Select Committee on Energy that it could be used in mixed oxide fuel, but, as has been said before, there is no market for that in the United Kingdom. It is quite unsuitable for AGRs. It may be used for PWRs, but how many will we have here? One is in the course of construction, but it will be some time before the

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programme materialises. I do not know how many more we shall have. There is no mixed oxide plant in the United Kingdom, although the process is thoroughly understood.

It has also been said that there may be a small European market for such fuel. However, West Germany is nervous about such matters, Sweden intends to close down its industry entirely by the turn of the century, Italy has virtually no nuclear power and although Belgium is a big producer of nuclear power it does not look as though a market will develop there. The Japanese are keen on the method and may use some of their own plutonium in PWRs. I fully support reprocessing because it recycles waste materials. One can draw out uranium and use it again in further fuel charges. One can draw out plutonium and then divert it, as a sensible policy, into fast reactors. One can take out the actinides, turn them into solid compounds and take them out of danger to civilisation. At present, however, we are stockpiling the stuff in large quantities. The report and the Government recommend that some of it should be passed over to National Power. I believe that it should never be passed over to the private sector, but should be under the control and scrutiny of the state. It is right for the defence of the realm that it should be so held.

I shall support the Bill. There are some interesting clauses, such as clauses 2, 3 and 5, which will excite much argument in Committee. The Government are doing a major job, but it behoves me to concentrate on clause 1, which deals with British Nuclear Fuels and is an important aspect of the Bill which may need to be refined. British Nuclear Fuels is a spendid and profitable company. It has great confidence in THORP for the future--far more than I have, even though plant will be written off and there will be heavy discounting to secure more contracts. Through its European connections, it has been securing many valuable contracts and earning foreign exchange. We are told today that it is the biggest earner of yen in this country, which is a signal achievement in itself.

Being able to do well today, however, does not mean that a company will be profitable tomorrow. Technological changes can bring abrupt changes of course which may be disastrous to companies. Let us hope that British Nuclear Fuels has a remarkably good course. It is asking for a further £500 million. Let us hope that it never comes back to the House again for additional money and that it will keep to the ceiling of £2,000 million. The coal industry never fails to come back to the House for more because it is greedy for extra money and once it has received the cash it begins to waste it.

7.56 pm

Dr. Kim Howells (Pontypridd) : I have the advantage of not having to be as generous in my assessment of the management at British Nuclear Fuels and its performance as the hon. Member for Havant (Sir I. Lloyd), whose contribution I admired greatly, as I did the contribution of the hon. Member for Bedfordshire, North (Sir T. Skeet).

Clause 1 asks the House to approve another £500 million of taxpayers' money being made available to bail out the management of a company which, over the past decade, has regrettably become a haven for smugness, complacency and arrogance, a management encouraged, moreover, by the willingness of successive Ministers

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throughout the period to sign virtually open cheques in lieu of that rarest of modern British commodities, hard cash for energy research and development.

I shall give one small but immediate example of the incompetence of the management at British Nuclear Fuels. On page 10 of the minutes of evidence in the report of the Select Committee on Energy, the chairman of BNFL, Mr. Harding, is reported as saying :

"The price of raw uranium moves in a fairly direct relationship with the world price of coal and oil. The fact that both those have come down has brought down with it the price of uranium." Yet on page 25 of the same report, a memorandum from British Nuclear Fuels in answer to the Committee says :

"BNFL is not aware of any direct links between uranium prices on the one hand and coal or oil prices on the other hand."

Considering the short time lapse between the delivery to the Committee of those two opinions, it is difficult to avoid the conclusion that the management at BNFL has either undergone one of its sudden and apocalyptic reassessments of operational costs or that its senior managers are not speaking to each other--or perhaps both. Whatever the real reason, it is clear that a lame duck rescue such as the one we are being asked to approve here has encouraged in BNFL an air of smugness instead of vigilance, complacency instead of readiness to respond to the realities of a changing world and arrogance, which derives from the sure knowledge that its cost-- plus contracts, which the Central Electricity Generating Board and the South of Scotland electricity board delayed signing until 1982, would cushion it from the real world.

The whole point of BNFL being set up was to recover uranium for thermal reactors and plutonium for fast reactors. As the hon. Member for Bedfordshire, North stated most eloquently, recent developments pose serious questions about those aims. Fuel prices, both existing and projected, have therefore played a crucial part in any assessment of BNFL's business. They are a crucial assessment in terms of our judgment of the Bill. If it appears that we in this House judge that traded world uranium prices are unlikely to rise significantly in real terms over the next 20 years, or that our nuclear stations are unlikely to require the service capacity offered by BNFL, or that the much-lauded BNFL foreign contracts are unlikely to prove the kind of bonanza that BNFL tells us they will be, then there is little point in stuffing another £500 million into the mouth of that company. Perhaps, however, the Government do not care about the odd £500 million. Perhaps they have failed to notice that BNFL's own graph in the Enregy Committee's report shows clearly that, in constant money values--indexed to the starting date of the graph, 1973--uranium ore prices are lower now than they were over 15 years ago, averaging at the moment around $12 to $15 per pound on the spot market. Perhaps they have also failed to notice that for a number of reasons the world's available reserves of uranium yellowcake are ample to meet current and projected demand and highly unlikely to decrease markedly in the foreseeable future.

Part of the reason for low prices and abundance of supply has been the failure of the nuclear industry worldwide to expand as people expected it to expand, in the aftermath of the Three Mile Island and Chernobyl accidents. In this country we have witnesed that failure of expansion first hand and, with it, the raison d'etre for much of BNFL's operations.

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Let us examine for one moment the performance of the advanced gas-cooled reactors--our AGRs that were mentioned by the hon. Member for Bedfordshire, North and upon which rest so much of the THORP project's hopes and aspirations. The CEGB has four AGR sites--Hinkley, Dungeness, Hartlepool and Heysham. However, a closer examination of that list reveals that only Hinkley B and one of the Dungeness reactors have put any electricity into the national grid. Hinkley is credited with a load factor of just 49.6 per cent. and the Dungeness reactor with a minuscule 1 per cent.--a kind of electronic spasm and a little like the Minister's hand as I imagine him signing the cheques for BNFL, year after year. The other Dungeness reactor is still not working after construction overruns that seem to have lasted decades. The state of the Hartlepool and Heysham reactors is as ropey as ever it was--Hartlepool especially.

So where is all BNFL's business to come from? Is it to come from the Scottish AGRs? Well, it had better, but it is by no means a certainty that it will. The conspicuously un-knighted chairman of the South of Scotland electricity board, Donald Miller, has made his views about BNFL's performance perfectly clear by signalling the premature closure of the Hunterston A station and at the same time by spreading the word that the SSEB's operational profits were nullified by the increased charges that he was forced to pay BNFL under the terms of its cost-plus contracts. Donald Miller's tactics may have given us an insight into the frosty state of relations between the generators and BNFL, but it will not have done his chances of a knighthood much good.

So where is THORP's great future to come from? From its foreign contracts, we are told. But what degree of certainty do we have that even they will prove to be anything other than a means of turning this country into the world's nuclear dustbin? The West Germans, for example, have decided that they do not need a nuclear reprocessing plant, despite the size of their nuclear generating industry. The Wackersdorf reprocessing plant project is being abandoned and there are well-founded rumours that the West Germans will use France's Cap Hague facility and not BNFL's THORP plant at Sellafield for future requirements.

The nuclear generating industries of the United States of America, Canada and Sweden have all decided that they will not go down the road of reprocessing. They have opted for direct storage technologies. The Swedes especially, with a much smaller economy than ours and an electricity supply industry that supplies,

proportionately, a much larger amount of electricity to the grid than does ours, have taken some hard and revolutionary decisions that will no doubt make them world leaders in the planning and practice of handling depleted nuclear fuel and waste.

What decisions are we being asked to make in considering the Bill? We are being asked to pour more good money after bad--and for what? So that we can continue to draw upon ourselves the opprobrium of the world for irradiating the Irish sea with Japan's nuclear waste? So that we can continue to find our requests kicked into touch every time we approach a foreign Government about allowing over their territories future flights by BNFL's plutonium- carrying aircraft? What a joy that little procedure has been. The Canadians have indicated their unwillingness. The Governor of Alaska has refused

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permission. I am sure that if polar bears could communicate with BNFL, they would refuse permission, too.

It is hard to imagine any species on earth daft enough to argue that plutonium should be flown from Prestwick to Japan. After the flight has headed north and over the pole, avoiding Iceland, Greenland, Ellesmere island, Alaska and eastern Siberia, of course, it heads south--past the Soviet Kamchatka missile bases and those of Sakhalin and the ones littered along the coast near the huge Vladivostok naval installations--before swooping down towards the Japanese mainland, one of the most densely populated areas on the face of the earth. What an eventful voyage each of those little beauties would have. I can just imagine the Soviet missile commanders not noticing the odd half tonne of plutonium drifting towards them every time there is a high easterly wind blowing in from the Pacific.

Why is BNFL not keen on transporting its plutonium by sea? Is it because it thinks that the Japanese may want it in a hurry when business starts up? That is highly unlikely, I should have thought. I cannot imagine that the Japanese want to manufacture miniature nuclear bombs. One cannot use plutonium for much else if one does not possess a commercial fast breeder reactor, or if one is not prepared to compromise the economics of thermal reactors by running them with some version of a mixed oxide fuel. Knowing the Japanese reputation for business acumen, that is highly unlikely.

Why, therefore, the BNFL proposal to fly it out? I would hazard a guess that it has dreamt it up as a means of cutting costs and of preventing yet another escalation of projected prices. If plutonium is sent by sea, the USA and other nations will demand, as they have already demanded, that it is escorted by an armed vessel that is capable of warding off attacks by hostile nations or terrorists or of aiding a ship that has got into difficulties so that there is no repeat of the tragedy that we have just witnessed in Alaska--but the tragedy of a plutonium escape, not oil.

There are Administrations throughout the world, such as the American Administration, who have become extremely concerned at reports of missing parcels of nuclear fuel and who will continue to insist that, no matter what the financial cost, no more should go missing. It is obvious that the cost of seaborne cargoes will be very high indeed if each one has to be guarded by the Royal Navy or by a privatised version of that service.

BNFL's motives are clear. It favours airborne transportation of fuel because it imagines that it will be cheaper than seaborne transportation. I warn the Minister not to trust BNFL's judgment. Its judgment has not been very good in the past. The accumulated risks and the potential costs of the kind of airborne error that we have witnessed all too often and all too tragically lately will be beyond calculation. BNFL's transportation ventures until now have been far from distinguished. Its peripheral involvement--however innocent it may have been--with the notorious Nukem- Transnuklear affair in West Germany has done nothing to improve its international image, however blameless it may have been over the whole issue.

It is a company that deals in the most dangerous substances known, and particularly in plutonium. Perhaps

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its plans to rush plutonium away from these shores by air are governed by an overwhelming desire to rid itself of the material as quickly as possible rather than because of Japan's desire to receive it. It already possesses 25 useless tonnes of plutonium at Sellafield. Nobody wants it. After all, what can anyone do with it, except spend millions on storing and guarding the stuff throughout the next millenium? The chairman of National Power does not want it. Mr. Baker's leaked letter makes that perfectly clear.

I have no doubt that the £500 million that we are being asked to underwrite in clause 1 will serve only to encourage BNFL to continue to underuse and waste the enormous reservoir of talent that it has assembled at Sellafield and at its other stations. I urge the Minister to exercise financial prudence, which this Government have done so often over the past 19 years in their administration of our other major energy concerns. For the sake of both common sense and responsible government, he should consider withdrawing clause 1, which provides for this extra funding.

8.10 pm

Mr. Harry Barnes (Derbyshire, North-East) : I apologise for not having been present for the entire debate and, in particular, for having missed the contributions of the hon. Members for Havant (Sir I. Lloyd), for Caithness and Sutherland (Mr. Maclennan) and for Bedfordshire, North (Sir T. Skeet), especially that of the hon. Member for Havant, who was Chairman of the Select Committee that produced the report which is relevant to this debate.

The Minister and the hon. Member for Havant, whose first few words I did hear, described the Bill as technical. As someone who cannot change a light bulb or a plug, or keep his own accounts, I think that the term "technical" is liable to make people like me dive for cover. Actually, there are two different interpretations of the word--it can be used to create two different impressions. The first is that the issue being described is minor and non-political. Clearly, this Bill is not that ; it is concerned, in the first clause, with extending the borrowing requirements of the nuclear industry by one third, and with advancing that industry's capability and capacity. If provisions such as clause 1 were not agreed to, the industry would be halted in its development. If the industry could not borrow, it would not be able to live quite as well as is intended.

Then there is the other interpretation of "technical" : that matters so described are non-understandable, that the issues are too complex for people such as me, and are understood only by civil servants and accountants and that we should therefore let it go through. But this is clearly not the case, for it is

understandable--if not in terms of some of the detail, clearly in terms of the principles involved. At least it provides those of us who do not have a technical bent an opportunity to make some anti-nuclear noises.

The borrowing requirement is to be extended for the thermal oxide reprocessing plant at Sellafield--THORP. Permission for its construction was given in 1978, when it was estimated that the cost would be £300 million. The plant was to come into operation by April 1987. By 1983, the capital costs had risen to £1,280 million, and the start-up was put off until December 1990. BNFL now says that the capital costs will be almost £1,500 million and that the start-up date will be late 1992. Are we sure that the borrowing requirements will not need to be raised? The

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