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Column 707AEA Technology has successfully exploited its nuclear-derived skills in non-nuclear markets. That has involved, for example, the development of non-destructive testing techniques using X-rays and ultrasonics.
AEA Technology developed the original robot used by bomb disposal teams in Northern Ireland. It developed power fluidics, which permits the design of pumps, mixer valves and precipitators without moving parts. That technology has particular advantages in industries such as pharmaceuticals and fine chemicals that involve the production and handling of delicate preparations with minimal damage.
AEA Technology scientists have used their skills in the development of advanced battery technology. Their lithium-ion cathode technology is now being sold to battery manufacturers throughout the world. In health care, AEA Technology has developed a unique three-dimensional laparoscope. That piece of equipment enables a conventional endoscope to give a 3-D picture. It offers major advances for keyhole surgery.
AEA Technology is currently developing a carbon fibre hip implant. It uses filament winding techniques originally used in the aerospace industry. The new implant will be less rigid than currently available metal implants. It will reduce the need for patients to return for second or third operations.
AEA Technology's safety skills have found a significant market in the North sea. Its experts assist operators by producing safety cases for offshore installations. It is a leading safety consultancy in the North sea.
AEA Technology also helped in the search for the causes of the King's Cross fire. Software developed by AEA was used to simulate the spread of fire up the escalator. The model was subsequently validated in scale-model trials at the fire research station. That input helped in the understanding of how the disaster happened. The same technology is now being used to ensure that new underground stations and tunnels are designed to minimise the risk of a similar accident. AEA Technology's National Environmental Technology Centre was formed last summer by the merger of its environmental operations with those of the Warren Spring laboratory. The centre carries out a vast range of environmental consultancy work. It helps customers meet increasingly demanding environmental standards.
The centre also runs the national air pollution monitoring network for the Department of the Environment, and the National Chemical Emergency Centre, which is on duty 24 hours a day. It helps to sort out chemical accidents throughout the world.
Let me now explain our plans for the future of AEA Technology. In my statement of 17 February 1994, I announced my intention to privatise AEA Technology. I explained that decisions on the form of privatisation would be based on AEA Technology's performance in the marketplace and on the extent to which the various options met customer requirements, enhanced competition, helped to improve UK competitiveness, and maximised the return to the taxpayer. The chairman of the authority and senior management of AEA Technology have made it clear that, in their view, those criteria would best be satisfied by selling the
Column 708business as a single whole. Employee representatives have also made it clear that they would wish to see the business kept together as far as possible. I naturally attach a great deal of weight to the views of management and staff. They are the people who know the business and whose commitment is crucial to realising its potential. The immediate task for management must be to drive forward the commercial development of the business. It must continue the process of focusing the business on its core activities. A good deal has already been achieved in that direction, but there is more to be done. Management recognise that and is committed to the task of carrying it through.
The range of AEA Technology's activities will no doubt continue to change as the business develops.
Mr. George Mudie (Leeds, East): Does the Minister think that there is anything strange in those in the management of a public sector concern wishing to go private, particularly in view of the examples of their predecessors in the public sector getting their noses in the trough in terms of share options and six-figure salaries?
Mr. Eggar: I am sorry that, in a sensible, serious debate about the way forward for AEA Technology and how to ensure that that excellent group of people has a prosperous future, the hon. Gentleman should lower the tone in that way. I will not indulge in party political spats of that nature. If the hon. Gentleman wants to lower the tone, that is entirely up to him. In every aspect of its business, AEA Technology is fully competitive. It has competitors in all aspects. Therefore, it has to keep tight control of its costs. It is inevitable that salary costs at all levels in the organisation will be a major factor in its ability to obtain business. What is more, the Government, as vendors of AEA Technology, whether directly or indirectly under the provisions of the Bill, will make sure that the best possible practice is followed and will take account of any Greenbury recommendations, whether or not those recommendations have by that time found their way into legislation, because that has been felt appropriate.
Mr. Robert Jackson (Wantage): I am following with close attention what my right hon. Friend says about the issue of unitary privatisation, because that is probably the critical issue. He talks about the core business of AEA Technology. What is the core business of a research organisation with a great range of customers, with synergies that run across a variety of activities? I warn my right hon. Friend to be very cautious when using the concept of a core business.
Mr. Eggar: It is for management to decide where its focus should be. The implication of what my hon. Friend has said is that whatever AEA Technology does now is automatically the core business for ever. Mr. Jackson indicated dissent .
Mr. Eggar: I see that my hon. Friend disagrees with my assessment of what he said. I think that he fully understands that, because it is a human skills business, because it is a business that will have to pursue the various scientific and engineering opportunities and other consultancy opportunities that are out there, because those opportunities are global and because they vary from time to time and from region to region, it will have to follow
Column 709the opportunities. The core is likely to change over time, therefore, but I think that it is undoubted and uncontroverted that the management will need to concentrate on specific aspects.
Mr. Jackson: I thank my right hon. Friend. I notice that in his answer, which I think was correct except that he made the wrong deduction from my remark, he emphasises the role of the management in deciding what constitutes the core business. I agree with him, and I very much hope that he will give great weight to the opinions of the management in deciding what the structure of the company is to be, whether it will be fragmented and what the core business will be, so that the management will not find itself overruled by the Department, as it might be.
Mr. Eggar: We attach a great deal of importance to the attitude of management and, when the time comes for us to decide on privatisation and the structure of privatisation, we shall of course pay attention to the opinions of management. However, as the owner, as the Government protecting the rights of the taxpayers, we must also take account of other considerations.
As I said in response to an intervention, the range of AEA Technology's activities will no doubt continue to change as the business develops.
Mrs. Gillan rose --
The range of AEA Technology's activities will no doubt continue to change as the business develops. It is inherent in the nature of a high-tech business such as AEA Technology that over time it should move out of some areas and into new ones, but, consistent with that, the Government agree that AEA Technology should continue to be managed as a single, integrated whole, focused on the goal of building an increasingly competitive and successful international business.
However, final decisions about the form of privatisation must depend on AEA Technology's performance in the months ahead, on the needs and requirements of customers and on confirmation from the market that a unitary sale will secure best overall value for money for the taxpayer. Decisions about the method and timing of the sale can similarly be taken only in the light of market circumstances at the time.
Mrs. Gillan: I thank the Minister for giving way. Further to the point made by Opposition Members, as AEA Technology's key resource is its people, does he consider that an element of employee ownership may be particularly appropriate in this case?
Mr. Eggar: A fundamental part of the Government's strategy is that when we move towards privatisation, we should seek to involve employees in one way or another. I added that caveat because we have not yet decided how we shall privatise the company--whether it will be by way of a flotation, a trade sale and so on.
Column 710I do not want to give a firm commitment about employee ownership at this stage. However, I attach a great deal of importance to it and the Government are committed to that strategy. I will be surprised if the final outcome does not involve an element of employee participation in the future success of the privatised entity.
Mr. Robert Jackson: I am sorry to trouble my right hon. Friend again, but I am sure that he will appreciate that this is an important matter, which concerns my constituency. He said that the Government want to keep their options open--although I welcome his comments about a single, integrated whole--and that we must review the position in the light of developments. Does he propose to return to the House to gain its approval of the Government's decisions on those points? I do not believe that the Bill makes provision for that and I wonder whether it should be included in the legislation.
Mr. Eggar: The Bill is an enabling Bill. It enables the Government to proceed to privatise AEA Technology--although, as I have indicated, not the rest of its activities. Given my hon. Friend's assiduity, I am sure that he will have the opportunity to call us to account using the various avenues that are open to him during the privatisation process.
My hon. Friend is absolutely correct: there is no process within the Bill by which the Government's decisions are automatically the subject of further debate in the House. Following the discussions that we have had over a number of years, I am well aware of my hon. Friend's close interest not just in this matter but in whether the sale should proceed on a unitary basis. The words that I used were chosen very carefully and I think that they will repay careful study by the staff of AEA Technology in his constituency and elsewhere. Let me say something more about the Bill. It provides scheme-making powers that will facilitate the sale of AEA Technology. It consists, in the main, of standard privatisation provisions, adapted to the specific conditions of AEA Technology.
As I said, the Bill leaves open options as to how the privatisation may take place. It provides for the business to be sold as a whole or in parts. It provides for the sale or sales to be carried out by the authority or by the Secretary of State. It leaves open the possibility of more than one transfer, and for the transfers to be carried out on more than one date.
The Bill specifically excludes the transfer by scheme of freehold land subject to a nuclear site licence. It also excludes the transfer of the nuclear site licence itself. As I emphasised, it is not a nuclear privatisation.
The Bill provides for the financial structure and control of the successor companies after vesting and while they are publicly owned. We shall also bring forward tax provisions in due course. As is customary, they will provide for the tax neutrality of any transfer to successors. We propose to introduce those tax provisions by way of an amendment for consideration in Committee in the House. Finally on pensions, powers are taken so that all employees transferred to a publicly owned successor company can remain in the authority's schemes until privatisation. The powers also permit us to allow new employees to join the schemes until privatisation. In order to maintain maximum flexibility, there might be a
Column 711publicly owned successor company and during that time employees would stay with public sector pension provision. In other words, the terms will be exactly the same as they are now.
When privatisation takes place, the Bill will place a statutory duty on the seller--us or the publicly owned company--to be satisfied that employees can join a pension scheme that is no less favourable than the authority's schemes. That means that the new scheme must offer benefits which are at least equivalent to the authority's schemes, although the mix of benefits may be different.
The duty reflects the Government's long-standing practice when public sector employees are transferred to the private sector, but we have set it out expressly in the Bill so that employees know exactly where they stand.
Mr. Miller: If the Minister is prepared to give that guarantee, why is he not prepared to give the same guarantees that were given to Amersham International at the time of its flotation? Would it not be more sensible in the interests of the employees and the employer to follow that course of action?
Mr. Eggar: The privatisation of Amersham International was 13 or 14 years ago. At the time, employees were offered the choice of staying in the existing scheme or joining a new scheme. I understand that since then, the vast majority of Amersham employees have opted for the new scheme. That shows that it is possible for the private sector to offer more than equivalent pension entitlements and pension schemes to those in the public sector. So that there is no misunderstanding, the rights that have been accumulated in the AEA public sector scheme will remain in place if the employees so wish. On the question whether the new scheme that is provided by the purchaser is at least equivalent to the authority's schemes, that will be audited by the Government Actuary. In other words, we shall have the advice of the Government Actuary as to whether that undertaking is made. That assurance is coupled with the experience of privatisations over the past 10 or 12 years, when there have always been scare stories about pension entitlements, but when the final settlement has been recognised by all parties to be fair to the employees and to the contributors to the schemes. That seems to me to be the appropriate way forward.
Mr. Miller: I am grateful to the Minister, but will he answer the question? If the Government believe in choice, why does he not give these particular employees the choice in these circumstances? Is there a single technical reason that he is hiding away from the House for denying those employees that particular choice?
Mr. Eggar: The way in which all privatisation pension issues have been tackled since the Amersham precedent is that new schemes have been provided for the employees who have left the public sector. The Government, having considered all the options, believe that that is the best way forward, subject to the absolute assurance that the new
Column 712scheme must offer benefits that are at least equivalent to the existing authority's schemes, although the mix of those benefits may be different.
Employees are AEA Technology's greatest asset. Without the skills of its employees, AEA would be nothing. We have no intention of selling employees short, and I am sure that the House will welcome the statutory reassurance that we are proposing.
Privatisation has been one of the Government's greatest success stories because it encourages efficiency and improves
competitiveness. Companies flourish when they are removed from state control. They perform better and they respond better to customers. We believe that privatisation is the only way to enable AEA Technology to realise the full potential of its scientific and engineering activities. There are enormous opportunities in the market. A fully competitive AEA Technology would be well placed to exploit those issues to the benefit of its staff and the United Kingdom. The Bill provides the key to unlocking that potential and I commend it to the House.
Dr. Lewis Moonie (Kirkcaldy): In a long and at times interesting speech, the Minister has tried to persuade us to give the Bill a Second Reading. In our opinion, if the Bill ever reaches the Statute Book it could do great harm to one of the few enterprises of which the Department of Trade and Industry can still be proud. I therefore regret to inform the Minister that my right hon. and hon. Friends and I intend to vote against the Bill today, for the many reasons that I shall outline later in my speech.
The Bill is not the privatisation measure that the President of the Board of Trade really meant to bring before the House during this parliamentary Session. As was mentioned yesterday, that was meant to be the fate of the Post Office, but alas, he and the Minister have been unable to convince sufficient numbers of their colleagues of the sterling merits of that proposal--in other words, to persuade them to vote for political suicide-- hence the inclusion of the present measure in the Queen's speech last November. How unfortunate for the President of the Board of Trade to be treated so badly by his party in the autumn of a distinguished career--
Dr. Moonie: No, winter implies that there is a spring. I am more than a little surprised to see the President of the Board of Trade and the Minister of State still in their places after the debacle attendant on the sale of the electricity generating companies last week. So far, with indifferent success, they have managed to dodge the charge of double dealing levelled at them by my hon. Friends and outraged investors in the city. I fear, however, that they may have seen their last donation from Trafalgar House. They will find it rather more difficult to avoid the only alternative explanation, which is that they are grossly incompetent. Sadly, incompetence has never been grounds for dismissal or resignation in the Tory party. If it were, I suspect that the Conservative Benches would be even more sparsely occupied than they are today. The Bill is unnecessary and ill timed and may well operate against the national interest. It will certainly be a great source of concern to many of the 4,000 employees of AEA Technology, whose jobs, pensions and terms and
Column 713conditions of employment will be affected to their detriment. As the Minister has told us, the Bill is a paving measure allowing AEA management to set up a company or companies which can be sold off without further effective parliamentary scrutiny. In other words, Ministers are asking to us write them a blank cheque--so much for open Government.
Besides that point of principle, which alone would be reason enough to vote against Second Reading tonight, I have listed four areas of general concern in the Bill which Ministers would do well to heed as they epitomise the failure of Government over the past 15 years. First, we believe that the Bill is ill timed. We are currently awaiting publication of the long overdue nuclear review. In addition to making proposals about present and future power generation, the review will be obliged to look at other elements in the nuclear equation such as BNFL, the future of the Government division of AEA, practical problems concerning decommissioning, storage and processing of nuclear waste, and the future of Dounreay which is of great concern to the hon. Member for Caithness and Sutherland (Mr. Maclennan).
Many of the arguments advanced by the Minister on behalf of the sell-off could apply equally to any of those agencies and services, in some cases with greater justification. For example, BNFL has secured world-wide markets for its services, including the thermal oxide reprocessing plant.
I am sure that the Minister has noted an article in The Independent on Sunday this weekend under the heading, "Nuclear sell-off planned". It says:
"Plans for an urgent, whole-scale privatisation of Britain's nuclear industry are being drawn up in secret by the Treasury." I presume that that is why the Minister knows nothing about them. "They could lead to an attempt to sell off the controversial Thorp reprocessing plant.
"The plans, which would also transfer Britain's oldest and most dangerous nuclear power station to British Nuclear Fuels, are causing a row between Chancellor Kenneth Clarke and . . . the President of the Board of Trade, who argues that they will lose votes at the next general election.
Mr. Clarke wants to announce the sell-off before the Easter recess and is keen to realise the money to finance tax cuts." AEA Technology forms part of a seamless organisation, which is why we feel that the Government would be well advised to wait until they see the outcome of their nuclear review before proceeding further. Many of the skills that have been placed in AEA Technology rather than the Government division by the present set-up are acutely relevant to the current and future well-being of nuclear technology. I quote from the recent publications list, which includes
"The Jet neutron emission profile monitor; Application and development of ion chromatography for the analysis of transition metal cations in the primary coolants of light water reactors"-- I understand what those are, even if nobody else except my right hon. Friend the Member for Copeland (Dr. Cunningham) does--
"An efficient 14-M-V neutron detector for use in mixed 2.5- and 14-MeV neutron beams".
Column 714Need I go on?
"A guide to the measurement of environmental gamma radiation; Operational trials of single- and multi-element CR-39 dosemeters for the DIDO and PLUTO reactors at the Harwell Laboratory".
The list is endless, and shows that AEA Technology is involved in nuclear research. To attempt at this stage, before we have the slightest sniff of what the nuclear review will include, is plain daft.
The division of AEA into so-called "nuclear and non-nuclear agencies" may have the merit of simplicity--always a key point for Ministers--but it lacks any valid justification. The suggestion that the Government division should be restricted eventually to a glorified purchasing agency for largely private decommissioning companies is justifiable only to a Government who have no intention of allowing it to operate profitably in the public sector even though it, too, could easily be a highly succesful operation. The Government division's decommissioning liabilities are the responsibility of the Government, who must provide the necessary resources for an effective programme, but at least some of the costs could be offset by allowing AEA to remain a joint agency covering both nuclear and non- nuclear work, selling its services on a world market which is increasingly desperate for quality of the kind that we can best provide. Why change things now, before those issues have been given proper consideration? It makes no sense.
Mr. Maclennan: The hon. Gentleman rightly described the Government's view as daft, but is it not worse than that? As the Minister has said that the Government have no intention of privatising the nuclear industry and that that is not what the Bill does, in the event of an attempt in the future to privatise the sort of activities that the hon. Gentleman has described it could be argued that what the Minister has said today would render that intention ultra vires. Moreover, he has made it even more difficult to carry out his stated purpose.
Dr. Moonie: The hon. Gentleman makes a valid point and I hope that the Under-Secretary of State will return to it when he sums up--given the number of hon. Members present, it will be an extensive summing up--the debate. There are a few things in the world worse than being daft. As a former psychiatrist, I can testify to that from my observation of the Government Benches over the past eight years. In passing, I should mention a further problem. The facilities management division of AEA, as the Minister has described--the part responsible for providing infrastructure support and general services to all AEA's sites--is currently being flogged off to the highest bidder, despite the pleas of the work force and the Opposition to delay the decision until AEA's future is decided. I understand--the Minister confirmed it today--that the contract is to be awarded to a company called Procord, formerly part of IBM, which was run by the present chairman of AEA, Sir Anthony Cleaver, before taking up his present appointment. The Minister should be well aware of how unwholesome such a position might appear
Column 715to an impartial observer. However, the Under -Secretary of State may be able to set our minds at rest on that matter when he sums up the debate.
Mr. Eggar: Perhaps I may deal with the matter now, as it is unfair to the current chairman of AEA to allow such a slur to rest, even for a few hours. The current chairman was aware that such a construction could be placed on the matter by Opposition Members. He therefore took no part in the board meeting at which it was decided to allocate the contract to Procord.
Dr. Moonie: I am happy to have that reassurance from the Minister. However, there is a big difference between making slurs and accusations, which I was careful not to do, and raising proper concerns about how Government business is conducted, which is our job even if the right hon. Gentleman does not consider it to be his. Our second reason for opposing the Bill is that we believe that privatisation is unnecessary. AEA Technology has been operating more than satisfactorily in the public sector as a trading fund for some years. It has been operating successfully, growing and diversifying, and it does not need to be sold off to make a go of things as it is already doing perfectly well in public hands. Unlike Amersham International, which was sold off 12 years ago and had a specialised range of products--a niche market for isotopes--AEA technology provides a wide range of specialist research and technological facilities and expertise. Its value lies entirely in the brains and skills of its employees. Such services might equally well be said to form a legitimate part of the work of a Department of Trade and Industry which took its job seriously.
AEA Technology requires working capital to continue its ambitious programme of expansion. Once again, there is no reason why that could not be sought from banks or investors in the City. The Minister will say that Treasury rules must apply. Why? Why should one Government Department be able to veto such a move? No legal requirement allows it to dictate the pace of expansion of a successful organisation in the public sector. One has only to consider the history of BNFL, before the rules were so conveniently changed a few months ago, the record of the British National Oil Corporation in public hands, or the history of BP following the takeover of Burma Oil in 1974, when the Government had a 70 per cent. stake in that company. None of those companies had any problem operating as plcs within the public sector, and I recall no complaints.
Purely because of the spite of Ministers following their failure over the Post Office, no company can be allowed to operate as a commercial success in public hands. AEA Technology must be sold off and BNFL must come under Treasury rules, purely to ensure that the President of the Board of Trade has an excuse, no matter how pathetic, for saying that nothing can be done for the Post Office either. The rule is that if you are successful you must be sold: there is no alternative--but at least the Department itself is safe enough on the basis of that criterion.
AEA should be allowed to trade commercially as a publicly owned company outside the public sector borrowing requirement. Its profits should be used both to fund future expansion and to defray the cost to the public purse of decommissioning old nuclear facilities and
Column 716Government reactors. There is no need for a sell-off. AEA is successful and can continue to grow and prosper under public ownership.
The third reason for our opposition to the Bill is our belief that the sale of AEA Technology is not in the national interest. For example, there could be serious consequences for our national research effort. At a stroke, an agency which is the equivalent of the engineering, science and technological faculties of any half dozen of our largest universities will pass out of the Department's hands and we shall lose control of the strategic direction of a highly valuable national asset.
We believe that the vast store of expertise in AEA should be directed towards carrying out work on behalf of the Government. We know that much of the value of AEA to major companies lies in the objectivity that a Government agency brings with it--an objectivity which could no longer be guaranteed if AEA belonged to one of a company's rivals operating in the same area. To get the greatest benefit from AEA technology, we must ensure its independence. We shall shortly see the first fruits of technology foresight, as the first round of results nears publication. Recommendations as to fruitful areas of investment in 16 distinct technology areas will be made, many of which are currently being studied by AEA. What a golden opportunity for the Department of Trade and Industry to get involved in preparatory research, prior to floating worthwhile projects on the market. Even the Government have admitted that they were rash to withdraw from near -market research in the 1980s.
Here is a chance to put that right, but will the Government take it? I very much doubt it. The Department has cut its support for industry in every year that the Conservative Government have been in office. The Secretary of State abandoned its advanced technology programme on the very day the Science White Paper was published in 1993 by the Office of Science and Technology. I suspect that, once again, we shall see the DTI ducking its responsibilities, behind a glossy smokescreen which promises much and delivers nothing.
Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury): Will the hon. Gentleman explain how a company which belongs to the Government and the assets of which are held by the Treasury can possibly operate outside the PSBR rules? Either it belongs to the Government or it does not.
Dr. Moonie: BNFL has done just that for the 15 years the Conservative Government have been in existence. It is only in the past few months that the rules have been changed, so I do not need to give any explanation. It is a perfectly legal and normal thing to do. It is a matter of choice whether the Government do it or not. It is not a matter of obligation.
In the past year, we have had a White Paper on competitiveness from the DTI which has been so successful that, without anything having been done about that one, the Department is to publish a second White Paper on competitiveness this summer. Perhaps that one will meet with more success than the former.
Mr. Ian Bruce: Many of my constituents will be listening to the debate and will want to hear, because they know that nuclear research and nuclear building takes decades--and one never knows, even in the next two or
Column 717three decades, the Labour party may yet get back into Government--what the Labour party's commitment is to the nuclear industry. May we have that clearly on the record, because that is much more important to many of my constituents, who believe that it will be sooner rather than later that the Labour party gets in, and therefore whether they will have a job in the future.
Dr. Moonie: It will certainly be sooner rather than later. I can give the hon. Gentleman an assurance that we shall keep the nuclear industry in the public sector. More than that I cannot say at the present time. I will, however, wait for the publication of the nuclear review-- whenever it comes--with great interest, to see what the Government's plans are for the industry and how well they are received.
Mr. Bruce: We have these exchanges across the Floor, but in past Labour party policy documents there was in effect a commitment never to build another nuclear power station, to seek to remove those currently in existence, particularly Magnox, to bring in more coal-fired power stations, and so on. Is there now a change of policy in the Labour party? Will the new Labour party build new nuclear power stations?
Dr. Moonie: The Minister of State may wish that it was perfectly clear, but I assure him that it was not. I do not intend to waste the time of the House discussing putative issues such as that. One thing, however, that the Labour party does see clearly is the need for strategic direction in the provision of long-term energy needs--something that is sadly lacking in the present Government's strategy.
Mr. Eggar: The hon. Gentleman has admitted, therefore, that the Labour party's energy policy will involve strategic direction. Will it or will it not strategically direct the building of new nuclear power stations?
Dr. Moonie: I shall be happy to give the right hon. Gentleman a lesson in strategic planning any time he wishes, but I certainly do not intend to spend any further time on the side road, as I do not know the answer. If I may, I will return to the matter before us. Hon. Members may think that the situation that I have described is bad enough, but I am afraid that there is worse to come. Last year, AEA absorbed Warren Spring, the Government's own environmental science research laboratory. We were told that their roles were complementary--another excuse for a budget cut, of course. If this privatisation is allowed to proceed, Warren Spring, a next steps agency, will in effect have been privatised with no parliamentary scrutiny of the procedure whatever.
AEA is also rumoured to have been the successful bidder, as part of a consortium, for the national physical laboratory, which is responsible for setting standards of physical measurement for the nation and is an institution that is respected world-wide. Do Ministers really believe that such a function should be sold off into private hands
Column 718and that any private company should be entrusted with such a national responsibility? Can the Government not see that there are some things that they must do for themselves? Their policy is stupid and short-sighted and they should think again.
My fourth concern is about the fate of AEA Technology's 4,000 employees. Trade unions representing staff have been vociferous in their criticism of the Government's plans--with justification, when one considers the fate of skilled work forces under all previous sell-offs. As I have already mentioned, AEA has some of the most highly skilled staff of any organisation and its concern for the future is about its employees' jobs, their terms and conditions and their pension rights following the sale of their company. I believe that those legitimate anxieties are fully justified, given the reluctance with which the present Government have applied even the limited protection afforded by the Transfer of Undertakings (Protection of Employment) Regulations.
I know that some steps have been taken to allay fears about pensions, through the introduction of schedule 3, which we shall debate in detail in Committee. I do not intend to go into it in great detail today. The promise of a pension scheme equivalent to that which employees currently have must be backed up in Committee by rather stronger commitments than exist at present before they are acceptable to the work force or to Opposition Members.
On terms and conditions of service, there will be no such guarantees, and there is a strong likelihood of redundancies, as AEA tries to fatten its balance sheet in preparation for privatisation. Activities which are considered to be marginal or of little short-term commercial relevance will be ruthlessly pruned away, and the work force will go with it. The concerns of the trade unions go even further. The Institution of Professionals, Managers and Specialists, in a memorandum submitted to the House of Commons Select Committee on Science and Technology, commented on the commercial viability of AEA, saying that
"there is a risk of early business failure for the privatised part of AEA, which would cause extra cost and difficulty for the Government. This is because increasing profit projections for Commercial Division rely on exploitation of monopoly situations that currently exist, for example, in the areas of decommissioning and waste management. Without the guarantee of long term Government contracts after flotation, the future of the Division would be at risk. In addition many of the potentially commercial activities assigned to Commercial Division risk failure since they are based on synergies with part of Government Division that would no longer be available to them. They would be unable on their own to demonstrate profitability at a sufficient level in the early stages and, under private sector criteria, would be closed down. Even if it does survive the privatised commercial division is likely to have to change its character."
That is clear enough. I should have thought that the previous experience of the President of the Board of Trade, when he was Secretary of State for Defence, might have induced a little more caution. Perhaps he has forgotten the fate of Defence Technology Enterprise, set up by himself to exploit defence technology in the civil field. Now, alas, it is no more: it closed down as a result of commercial failure of the kind that I have been describing. There is thus a justified trade union fear for AEA Technology.
I shall now deal with some detailed criticisms of the Bill which reinforce our decision to oppose Second Reading. It is clear that Ministers have absolutely no idea what form the sale of AEA Technology will ultimately
Column 719take. They just do not know how to do it, only that they must continue with their dogmatic opposition to anything that is good remaining in the public sector. Quite apart from the division of the AEA's business into nuclear and non-nuclear, however specious that may be, a separation which is neither as easy nor as advisable as the Government would have us believe, they do not know when it will be sold, in what manner it will be sold, what size of packages will be involved or who will purchase it.
An editorial in the Financial Times suggests that the ideal solution must be a management buy-out which would create a sense of partnership among the companies' employees and guarantee the AEA the independence to underpin its credibility as a consultancy. The alternative would be flotation as a private company. However, that would not be easy as investors would have to be sure that the company had a worthwhile portfolio of contracts and that its principal assets--people--would not walk out of the door. Only as a last resort should the Government consider the remaining option--sale, in whole or in part, to trade purchasers. That would be highly unsatisfactory. The AEA would lose its independence and, if broken up, its range of skills as well. The Government must make it clear early in the Committee stage exactly what their intentions are. We certainly intend to press them further on that important matter.
So far as I can see--I may have missed it--there is no provision in the Bill for the retention of a golden share in AEA Technology, which I hope that the Government will consider as they have done in other enterprises that they have tried to sell off. If they do retain a golden share, what will it be worth? Previous golden shares have been only a temporary respite for the companies involved. In view of the strategic nature of much of the research involved, will the Government ensure that no foreign buyer will be able to take over the company? After all, where research covers sensitive areas, that is a right even under present EC competition rules. Will the Government give that guarantee to the company if it is to be sold into the private sector? They must answer that question before the Bill proceeds much further.
Clause 3 empowers management to take any action that it sees fit to facilitate privatisation. What on earth does that mean? Does it mean larger salaries, share options, better cars, l,000 redundancies? Some amplification is surely desirable. One thing of which we can be sure is that the work force will see little benefit from such provision as management fatten up this particular calf for privatisation. Clause 10 removes an important qualification from the members of the board of the AEA. The Atomic Energy Authority Act 1954 stipulated that board members should include people with three particular skills. Clause 1(3) says:
"All the members of the Authority shall be appointed by the Lord President of the Council and of those members--
( a ) three shall be appointed from amongst persons appearing to the Lord President of the Council to
be persons who have had wide experience of, and shown capacity in dealing with, problems associated with atomic energy; and
( b ) one shall be appointed from amongst persons appearing to the Lord President of the Council to
have had wide experience of, and shown capacity in, administration and finance; and
( c ) one shall be appointed from amongst persons appearing to the Lord President of the Council to have had wide experience of, and shown capacity in, the organisation of workers."