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Column 393

Sims, Roger

Smith, Tim (Beaconsfield)

Soames, Nicholas

Spencer, Sir Derek

Spicer, Sir James (W Dorset)

Spicer, Michael (S Worcs)

Spink, Dr Robert

Spring, Richard

Sproat, Iain

Squire, Robin (Hornchurch)

Stanley, Rt Hon Sir John

Steen, Anthony

Stephen, Michael

Stern, Michael

Stewart, Allan

Streeter, Gary

Sumberg, David

Sykes, John

Tapsell, Sir Peter

Taylor, Ian (Esher)

Taylor, John M (Solihull)

Temple-Morris, Peter

Thomason, Roy

Thompson, Sir Donald (C'er V)

Thompson, Patrick (Norwich N)

Thornton, Sir Malcolm

Thurnham, Peter

Townend, John (Bridlington)

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Townsend, Cyril D (Bexl'yh'th)

Tracey, Richard

Trend, Michael

Twinn, Dr Ian

Vaughan, Sir Gerard

Viggers, Peter

Waldegrave, Rt Hon William

Walden, George

Walker, Bill (N Tayside)

Waller, Gary

Ward, John

Wardle, Charles (Bexhill)

Waterson, Nigel

Watts, John

Whitney, Ray

Whittingdale, John

Widdecombe, Ann

Wilkinson, John

Willetts, David

Wilshire, David

Wolfson, Mark

Wood, Timothy

Yeo, Tim

Young, Rt Hon Sir George

Tellers for the Noes: Mr. Bowen Wells and Mr. Michael Bates.

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Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments) and agreed to.

Madam Speaker-- forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House applauds the record levels of investment in the railways in recent years, including more than £6 billion over the last five years; notes that since nationalisation, despite investment of more than £54 billion in the railways, the proportion of travel undertaken by train has steadily decreased; believes that the railways will be better placed to offer an improved service in the private sector; welcomes recent announcements by the Franchising Director, which represent significant milestones on the path to a privatised railway; supports the new rail fares regime, which will see ticket prices regulated on every line in the country and will produce real fare reductions; believes that the Franchising Director's announcement struck a proper balance between the interests of the passenger and train operators; and condemns the continued failure of Her Majesty's Opposition to offer any policy to stem the relative decline in railway use.

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Nuclear Power Industry

Madam Speaker: I have selected the amendment standing in the name of the Prime Minister.

7.14 pm

Mr. George Robertson (Hamilton): I beg to move,

That this House believes that the privatisation of the nuclear power industry is unwanted and unnecessary and is not based on an assessment of Britain's long-term energy needs or industrial strategy but is a cynical, short-term move designed to raise money for tax cuts before the next General Election; further believes that taxpayers will be left with the bill for the decommissioning of the Magnox stations and for the management of the nuclear waste that accrues, that nuclear privatisation will do nothing to promote the interests of consumers, and that claims of guarantees on distinct identities for Scottish Nuclear and Nuclear Electric are worthless; and calls on Her Majesty's Government to abandon immediately its plans to privatise the nuclear power industry.

Two weeks ago, the Conservative party lost 2,500 local government seats all over England and Wales. After the wipeout that it had suffered in Scotland one month earlier, it was left with only a miserable control of eight councils in England and none in Scotland and Wales. That was, by any standards, an unprecedented and unmistakeable rebuke to the Government. In any other democracy, it would have led to the Prime Minister's head rolling down Whitehall. What has the Government's response to the salutary verdict of the people been? Has it been contrition? No hope. Has it been reflection? Not even for a moment. Has it been a recognition that some policies may be wrong and need changing? Fat chance of that. Instead, the voters will receive more of exactly the same mixture that brought about the local council humiliation. The first signal of a contempt for the democratic voice was the announcement last week of the last desperate privatisation of the nuclear power industry.

The Conservative party is addicted to privatisation. Having got rid of the last family spoons from the cupboard, it is now down to the family's nuclear reactors--that is the act of a Government in desperate and terminal trouble. Let us not forget that this was the privatisation from which even Mrs. Thatcher walked away. It seems that when it came to the nuclear industry, the lady was for turning. Why does not the Secretary of State for Scotland--he was, allegedly, one of those who opposed it in Cabinet--tell the President of the Board of Trade, even if he is in China, that he should do the country a favour by ensuring that Mrs. Thatcher's U-turn is replicated in 1995?

This privatisation has nothing to do with energy policy or industrial strategy. It is

"to be shaped by political pressures and the interests of future shareholders, not by the needs of electricity consumers." Those are not my words or the words of any Opposition politician; they are the words of last Wednesday's Financial Times editorial. They should be marked by the Government because they speak the truth.

The privatisation is just a cynical and desperate attempt to raise money for tax bribes before the next election. The same wonderful people who gave us the dash for gas now give us the dash for cash. It is no coincidence that the madcap scheme comes when the Government have discovered an overshoot of £1.2 billion in their borrowing targets and a gaping hole in their tax bribe treasure chest.

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Ministers now seem prepared to sell anything, even the most sensitive of industries, to plug the hole in Treasury coffers. The consumer is offered what looks like a sweetener--cash for not asking questions: the £20 that is allegedly to be cut from domestic bills. It is a con--the political equivalent of the three-card trick. The £20 off--the 8 per cent. reduction in electricity prices-- has been trumpeted by the Tory party and held up in the private Tory party briefing for Conservative Members as the major argument for the privatisation. That sweetener has nothing to do with privatisation. Ending the fossil fuel levy has nothing to do--

Mr. Phil Gallie (Ayr): Will the hon. Gentleman give way?

Mr. Robertson: How can I resist the hon. Gentleman?

Mr. Gallie: Does the hon. Gentleman agree that nuclear engineering and nuclear generation are desirable? If they are, does he believe that there should be another nuclear power station built in the United Kingdom? If he believes that, could he suggest a cost for it and say whether a Labour Government would ever find the cash to supply such a station?

Mr. Robertson: The hon. Gentleman might check what his own party is saying about the matter, as it happens to be the Government temporarily. The privatisation reveals that there will be no more public finance in order to build nuclear power stations. The Government are ending the nuclear build programme. It appears that the Whips and the Scottish Office Ministers have spoken to the hon. Gentleman who rebelled a couple of weeks ago in Scotland--perhaps he rebels all the time now--and, as a consequence, he is crawling around attempting to support a case that he knows deep down is not worth sustaining.

Ending the fossil fuel levy has nothing to do with flogging off the nuclear reactors of Britain to whoever wants to buy them. It is a cynical and serious matter to deceive the electorate by pretending that it is largesse resulting from privatisation. Perhaps the Secretary of State for Scotland will confirm whether the 8 per cent. price reduction and the £20 that the Government claim will be cut from electricity bills could have been achieved while retaining the nuclear industry within the public sector.

Will the Secretary of State concede that point? I shall give way to allow him to answer that relatively simple question. Could not those price cuts-- that sweetener--have been made without privatisation? I shall give way to allow the right hon. Gentleman to answer that simple and important question. Will he tell the House and the country the answer? Is he not able to tell us; does he not know the answer? Is it not a fact that, if he stood at the Dispatch Box, he would be forced to admit that the sweetener has nothing to do with privatising the nuclear power industry but has to do with a fossil fuel levy that could have been cut off at any point? By his silence, the Secretary of State reveals the weakness of the Government's case. We can draw only one conclusion from his silence.

Dr. Michael Clark (Rochford): Perhaps I could attempt to assist the hon. Gentleman by answering the question that he has put several times. He will know that the nuclear levy has been withdrawn because the liberalised and semi-privatised nuclear industry, which has been run very effectively as a separate company, has

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raised enough cash to pay for decommissioning the nuclear power stations in due course. The next step is to privatise them so that they will become even more efficient and effective. The money has been raised by the efficient working of the nuclear industry since the initial privatisation took place.

Mr. Robertson: The hon. Gentleman is normally authoritative about these matters, and I admire his courage in wandering into the firing line when a member of the Cabinet sits rooted to his seat when confronted with that relatively simple question. However, there is no evidence to suggest that the hon. Gentleman is correct. Last Wednesday, the Financial Times made exactly that point in an analysis which was cruel from the Government's point of view. It said:

"unless the government can come up with a convincing explanation of how the money will be found, the assumption must be that the cost"--

of decommissioning--after all, that is what the nuclear component of the fossil fuel levy was all about--

"will ultimately fall on the taxpayer".

The reality is that the Government are going to privatise the nuclear power industry and quite separately--it is irrelevant to the privatisation process--are going to cut off one part of the fossil fuel levy and give the people their money back as a free gift.

Dr. Robert Spink (Castle Point): Will the hon. Gentleman give way?

Mr. Robertson: No, I shall make some progress.

The Government intend to bribe the people with their own money, which was to go towards paying the vast and indeterminate costs of decommissioning Britain's power stations. As the Financial Times correctly points out, that money will have to be raised from the next generation of taxpayers. As usual, the taxpayers will suffer as the new shareholders get a bargain.

The Government's nuclear sums simply do not add up. The Government claim that the Magnox liabilities for Scottish Nuclear and Nuclear Electric amount to £8.5 billion. Will the Secretary of State confirm that that is less than the combined total worth of the two companies as is stated in their annual reports? How does he explain the discrepancy between the Government's figure and what is in the annual reports? What piece of creative accountancy can justify that discrepancy? Will he make available to the House a full detailed breakdown of the Government's new estimates so that hon. Members can decide for themselves?

Dr. Spink: Is the hon. Gentleman aware that the first phase of decommissioning the Berkeley Magnox plant has been completed and that it cost one third less than was estimated? Other research shows that the decommissioning costs will be much lower than assumed initially. Will the hon. Gentleman acknowledge those facts?

Mr. Robertson: The hon. Gentleman uses one example to make one point, but there are plenty of other examples. The industry experts know that the decommissioning costs will be much greater than the Government estimate. If the Government are willing to publish the details in full, perhaps Opposition Members will be persuaded by the Government's argument.

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On the basis of the Government's own figures, £5.9 billion has been raised so far to meet the liabilities. Will the Secretary of State confirm that, even according to the Government's published figures, a £2.6 billion funding gap remains? Will he confirm also that even the £5.9 billion figure includes speculative projected savings of 10 per cent. in Magnox liability costs that may or may not materialise? If they do not, the gap in the Government's nuclear sums will increase to £3.5 billion.

There is no guarantee that the Government will raise even that amount from privatisation. Some of the estimates that we have seen so far have been as low as £2 billion. Even if all the cash raised from privatisation were put aside to pay for decommissioning, there is no guarantee that it would meet the full minimum costs of the Magnox liabilities. Of course, it will not be put aside for decommissioning; it will be used to pay for tax bribes to save a dying Government. Once again, future generations will be forced to clean up the mess that is left by the Government. The public will pay twice because the money that was supposed to pay for decommissioning was spent instead on Sizewell B and the income from Sizewell B that was supposed to help to finance the liabilities of the Magnox plants will be hived off. In other words, the private shareholders will get the assets and the taxpayers will get all the liabilities and they will pay twice. That is some deal for the taxpayers.

Although much attention has correctly been focused on the Magnox liabilities, I would like to pursue the Secretary of State--if he ever decides to answer a question--on the issue of the other liabilities that the private sector will have to accept. Perhaps he is currently being briefed about my first question. It seems pointless to ask questions of him if he does not even bother to listen to them. What guarantees can the Government give that the taxpayers might not in future have to foot the bill for decommissioning Britain's advanced gas-cooled reactors and pressurised water reactors? Given the difficulty of quantifying decommissioning costs, does the Secretary of State expect the private sector to accept such massive, open-ended liabilities? Of course he does not; no one does. The Financial Times said:

"The City is likely to demand a premium for investing in nuclear power . . . Investors will want reassurance about the liabilities for clean-up costs."

Of course, the implicit deal is that the public will get stuck with the bill. The financial risks involved in investing in the nuclear industry will be massive. If the operators are persuaded to buy the industry, frankly, it will have to be at car boot sale prices, and a boot sale bargain is precisely what it will be. The new Sizewell B reactor cost almost £3 billion to complete, so, in effect, investors in the nuclear power industry are buying into a new holding company and they will get the other seven reactors for free--eight nuclear reactors for the price of one. Once again, the bottom line is that the Government are selling off public assets at a massive discount to the City and a massive loss to the country.

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What happens if the privatised company falls into financial difficulty? After all, it will not be just any old company. It cannot board up the windows of nuclear power stations and put up a "To Let" sign. We are talking about nuclear reactors. If the privatised company does not make sufficient provision for decommissioning, the taxpayer will have to pick up the tab as a last resort. Will the Secretary of State for Scotland tell us tonight that that is not true and that, in the deep recesses of the future, the decommissioning costs will be picked up by the private buyers?

It is no use the Government saying that a segregated fund for decommissioning will do the trick. A private company, whose entire raison d'e tre is to maximise returns to shareholders, will not want to set aside money for decommissioning. Heaven knows, the short-termism in the City of London is such that most investors are concerned with the next five to 10 years at most, never mind liabilities that may arise 100 years down the line. What real incentive will a private company have to put aside the necessary money?

Of course, nobody knows what the final bill will be. In respect of Sizewell B, for example, nobody has ever decommissioned a pressurised water reactor before. How do we know how much it will cost to decommission Sizewell B? The answer is that we do not know. However, we know that Scottish Nuclear is budgeting £10 million this year alone to start decommissioning Hunterston A in Ayrshire.

We do not even know how the Government plan to dispose of old stations and their waste because Ministers have swept the issue under the carpet until after privatisation. What else will be swept under the carpet? What other rabbits will the President of the Board of Trade pull out of his hat once the shares have been sold? What guarantees do investors have that they will not be sold another false prospectus by the Government? Investors know that it has happened before and they have a right to know now what the prospectus will be. Far from offering the nuclear industry a bright future, nuclear privatisation is just another way for the Government to further absolve themselves of the responsibility for Britain's long-term energy needs.

Ministers are quick enough to criticise Labour for refusing to invest in new nuclear power stations, but I say to the hon. Member for Ayr (Mr. Gallie), who should know better--perhaps he was put up to ask the question- -that the Government are not prepared to invest in new generating capacity either; they are not prepared to put their money where their mouth is.

The inevitable consequence is that any privatised nuclear company unable to find money for a new nuclear power station will want to diversify into gas- fired generation. Everybody says it and everybody knows it. The Times put it succinctly last Wednesday:

"That could mean that a private nuclear industry would by slow degree cease to be nuclear at all."

What future is that for the nuclear industry or, for that matter, for the coal industry that was decimated by the previous dash for gas? Do not Ministers care at all about the long-term mix of energy resources?

Roger Hayes, director-general of the British Nuclear Forum, said: "It is . . . unfortunate that the Government appears to believe our energy needs can be left entirely to that the short-termism of market forces. They cannot."

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