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Mr. Wilson: I am grateful to the hon. Gentleman for making our case. Everyone I know who works in the industry would agree with everything that he has said in the past few minutes, but would draw a diametrically opposite conclusion. The folly of privatisation is that those who have built up experience in the industry and are steeped in its safety culture are leaving the industry in droves because they see no future in it. What they and Captain Killick see is increasing contractorisation and people coming into the industry without that commendable background in safety to which the hon. Gentleman refers.
Mr. Gallie: Once again, I disagree with the hon. Gentleman against a background of experience and involvement. I was an employee of the nationalised industry when it was the South of Scotland electricity board. At the time, the employees had the same fears and concerns for safety standards, but when changes were made and the industry entered the private sector, many of the old shackles, particularly on station management, were removed and there was a new freedom within the industry in which individuals could use their skills.
We should take a positive view. Perhaps my views differ from those of people who are currently employed in the nuclear industry, but no one likes change. That is exactly as it was in the old days of the SSEB. However, people absorb change. Things have changed in the electricity industry. The number of employees has decreased because there was little doubt that it was overmanned. That is not quite the same in today's Scottish Nuclear, but there have been changes as we have moved towards privatisation. That is why the performance of the stations has improved so much.
Not only will the employees and the industry benefit--so will the consumers. The hon. Member for Cunninghame, North asked me to look back at the lessons of history. One of the lessons I learned at the time was the sadness in the SSEB that the nuclear industry was to be separated from the new Scottish Power. At that time, there was a feeling that it would have been tremendous if the nuclear stations could have been incorporated in the vertically integrated Scottish Power and Scottish Hydro-Electric, which no doubt would have had a share. People in the industry at the time regretted that omission. On that basis, I suggest that the hon. Gentleman's earlier intervention has been turned on its head.
We should consider the progress that has been made in the nuclear industry. Today we talk about British Energy plc, but it has two components: Scottish Nuclear and Nuclear Electric. Although I recognise the achievements of Nuclear Electric in driving down its unit costs and increasing productivity by 100 per cent., I make no apologies for concentrating on some of the achievements of Scottish Nuclear over the past two or three years.
Two or three years ago, Peter Robson, the director of production at Hunterston, told me that his target was to reduce the cost of nuclear generation from 3.2p to 2.2p per unit. I was pretty sceptical about whether that could be achieved, but remarkably, it has been achieved in the run-up to privatisation. It has been achieved against the background of a falling roll, an increase in safety standards and an improvement in plant at Hunterston. The hon. Member for Cunninghame, North will confirm that. If he is not prepared to do so, he should look at the report of the operational safety review team of the International Atomic Energy Agency, which demonstrates that safety standards have been improved.
The report states:
That does not suggest that morale is falling in the work force at Hunterston. The report continues:
That is a remarkable achievement against a background of falling work rolls. It concludes:
Yet Opposition Members tell us that we should be concerned about safety. I have no such concerns as those in the industry are showing the way forward.
A letter dated 15 May from the British Nuclear Industry Forum states that privatisation will lead to new standards and enhanced concentration on safety matters and export potential can be raised. It stresses the importance of diversity of supply. I have some nagging doubts on the latter point, given that I want to see investment in the nuclear industry. Like the right hon. Member for Chesterfield, I believe that there is potential to expand nuclear generation as we move into the next century. Perhaps my hon. Friend will give us some words of comfort in his reply to the debate.
When I look back at the industry in the public sector, I pay tribute to John Collier and to James Hann, who was part of the nuclear industry for too short a time.
Mr. Alan W. Williams:
On a point of order, Madam Deputy Speaker. We are running out of time, yet we have heard two speeches from Conservative Back-Bench Members that have lasted for more than 20 minutes. As at least four Opposition Members would like to take part in the debate, will you ask the hon. Gentleman to conclude his comments?
Madam Deputy Speaker:
I have no powers under the Standing Order which can be invoked to shorten speeches. However, I should point out that from the point of view of the Chair, it is possible for the debate to run till 10 o'clock.
Mr. Gallie:
I stated earlier, when I gave way to a host of interventions, that I might overrun. I feel passionately about the industry; it is my industry and I want to contribute to it. I am only sorry that so few Members are here today. I would have thought that on an Opposition motion on this issue, the Opposition Benches would have been packed, but that is not the case.
I want to make one point on the old public sector and the decision in the 1970s to develop the advanced gas-cooled reactors. I was great fan of the AGRs, but in retrospect it may have been a wrong decision because they were not commercially viable. I wonder whether a different decision would have been taken had the industry been in the private sector. I remain a fan of AGRs, but we have to face reality. We have not sold them abroad and we have not been able to cash in on them and it is unlikely that any further AGRs will be built. That is reality and we have to face up to it, but would it have been different had the industry been privatised from the start?
Mr. Martin O'Neill (Clackmannan):
I realise that the hon. Member for Ayr (Mr. Gallie) faced two problems. First, he was only the second Conservative Member who was prepared to defend the privatisation today; secondly, he has an affection for the industry, which he described as "his" industry. That is understandable--it is the hallmark of many public sector enterprises--but the hon. Gentleman should recognise that, if the motion is defeated, the nuclear industry will no longer be his industry: it will become the possession of those who want and can afford to buy into it.
In investigating the privatisation, the Select Committee dwelt at some length on safety, partly because the Committee was impressed by the testimony of Captain Killick. He was one of those responsible for the dramatic increases in efficiency that took place--consistent with safety--in Scottish Nuclear, and his concern about safety drew the attention of all Committee members to the issue. We also feared that the scheme, which at that time was just an idea, would provide executive perks which might prejudice decisions on critical safety matters.
In the recent past, it has been suggested that decisions relating to the closure of power stations were not made as timeously as they might have been because of wider commercial considerations. I do not make that point lightly; I want to put it on the record. We need assurances about the nuclear installations inspectorate. The hon. Member for Truro (Mr. Taylor) pointed out that the United States had many more inspectors. There is a reason for that: safety has never been an in-house responsibility in the American nuclear industry as it has in the publicly owned British industry, whose different structure led to a different degree of monitoring and regulation. It is wrong to suggest that the United States has more inspectors because the work is more dangerous. We fear that, following a change in the ownership of the nuclear industry and the introduction of different priorities, we may see the collapse of the safety culture that has been at the heart of much of the safety that we have enjoyed.
I do not subscribe to the view that we are just waiting for a Chernobyl to happen, or that Three Mile Island is just around the corner. Such suggestions are irresponsible, degrading and demeaning to people who work in the industry, whose record is as good as those in most other parts of the world--if not better.
One of the problems of privatisation is that the demand for profit will lead to jitteriness at every turn. We have already seen that in relation to the refuelling
issue. We know that a 1 per cent. drop in output will result in a loss of £140 million, and that, if we do not see an increase from 74.5 per cent. to 82.5 per cent., the privatised industry will be in very precarious circumstances in its first year of operation.
If I "scaremonger", it will not be about safety; it will be about the commercial concerns of potential investors. If they cannot be guaranteed substantial profits over a short time, they will not be interested. We have observed the fickleness of the British public in this regard: we saw the way in which they went off British Gas in a very short time. Throughout the debate, my hon. Friend the Member for Leeds, West (Mr. Battle) has reminded the House from a sedentary position that we have seen the spectre of Yorkshire Water. We know that a number of privatised concerns are not run effectively, and already it is likely that this industry will be sold for less than its asset value. For a time it may well be profitable, but during that time we shall see the building up of share options, the introduction of performance-related pay and all the mistakes that have been made by the other privatised utilities.
At some point, there may well be a case for further investment in nuclear power. I am not one of those who think that the door is locked. I do not believe that anyone need go into the room now, but in four or five years we may have to consider providing additional nuclear capacity in about 10 years to replace the capacity that will be closed down. We shall need that capacity even if we are to have coal-fired power stations, which are by their nature a greater pollutant. If we want a balanced energy policy, and if we want to take advantage of the opportunities open to us, we cannot realistically exclude the nuclear element. The fact is, however, that that element is not an attractive proposition--at least at the present time--to those who will own and run the new British Energy.
Those people are not concerned with national energy matters; they are preoccupied with the need to secure a return for their investors. They are not concerned about the country's energy priorities. Some of us, however, are concerned about those issues and we believe that there should be some planning and foresight. No kind of power station can be built in the short term; it is not possible to sign up exclusively to a single energy source, such as gas, and then a few years later build a couple of coal-fired power stations or a nuclear power station. In about 10 years, there may be a drop in generating capacity, and in about four years we must be capable of making choices. I do not think that a privately owned nuclear generating industry will be interested in a form of energy which--although it may be environmentally attractive, and important in terms of national economic priorities--cannot generate electricity at prices that will attract the market. If national energy priorities are to be met, nuclear energy generation must be publicly owned.
Perhaps the Government are leaving a way out in the form of Magnox Electric. I know that there is a good deal of ambition in British Nuclear Fuels plc and in Magnox Electric, but neither body is integrated at present. I have the impression that they are not even speaking to each other, although they will both be under the BNFL umbrella. I also have the impression that the Government could not give two hoots: I suspect that they do not see
this as a means of generating electricity but that, according to the "stand on your head" approach that is a hallmark of nuclear economics, it is better to keep the Magnox stations running because it is more dangerous and expensive for them to lie idle or to be abandoned. They must therefore be sustained until the end of their natural lives, which may last a bit longer than we think. Beyond that, we have no clear indication of what will happen to the Magnox stations. We know that BNFL's main role will be in decommissioning.
As for the long-term prospects for future generating capacity, the Government have made it clear--the Minister certainly made it clear in his evidence to the Select Committee--that they are not interested in a new public sector for nuclear power. I consider the deal to be very short sighted. It is regrettable that the Minister has made little or no attempt today to address any of the recommendations in our report. We are three days away from the vesting date of the new companies, and we were led to believe that a prospectus would appear after 1 April. We were told that there was a good deal of work to be done, but that the Government were confident that that date would be met. I do not think that 6 pm on 26 March, four working days before the end of the month, is too early to expect Ministers to come here and tell us how they would deal with the questions that we have put to them.
The Government have signally failed on every issue. Yesterday's statement served only to confuse the situation. We are not sure what the £230 million is for. Perhaps when the Minister for Small Business, Industry and Energy winds up the debate he will tell us whether that sum is a provision for the defuelling of the nuclear core in the abandoned reactor. If not, will that sum be included in the segregated funds? What will the discount rate in the segregated fund be? Those are the critical points that investors will want to know. Ministers may have to wait until April fools day before they tell the world because they have not worked it out, but the House is entitled to know the answers.
The purpose of Select Committees is to monitor and to ask awkward questions. Sometimes they get embarrassing answers, but we have yet to get any answers from the Minister for Industry and Energy. I thought that it was personal because for years I have been abused by the Minister and I thought that he did not like me. I now realise that that is how he treats everyone who speaks in the House on energy matters. He substitutes insult and bluster for argument, logic and fact.
I know that the Minister for Small Business, Industry and Energy is the junior Minister and he is more constrained. I hope that tonight he will confirm that three months of work by the Select Committee--I came into the investigation later in the proceedings, but I speak for my colleagues on the Select Committee from both sides of the House--was not in vain and that the Government have taken it seriously. I hope that the report has been addressed in a way that respects the status of the Select Committee and its serious conclusions.
"Significant improvements have been made in the preservation and material condition of plant systems and equipment through enhanced maintenance and conscientious attention to identifying and correcting equipment problems."
"Training programmes have been substantially strengthened".
"A stronger emphasis on nuclear and industrial safety in the station is evident."
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