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6.14 pm
Mr. Michael Clapham (Barnsley, West and Penistone): I wish to answer some of the points raised by the hon. Members for Ayr (Mr. Gallie) and for Castle Point (Dr. Spink). The Government's proposals are ill conceived and, indeed, flawed. That is not just my view, but that of the Select Committee on Trade and Industry, which identified several of those flaws. If the Minister for Small Business, Industry and Energy cares to spend some time on the Select Committee report, he will note that those flaws are clearly set out in the 18 recommendations made by the Select Committee.
I wish to deal briefly with the myth that seems to drive much of the Government's thinking--the myth that public is bad but private is efficient and good. The idea that the maximisation of shareholder value is best for the consumer has been shown to be shallow in case after case. In this instance, it is plain barmy, because profit and plutonium do not mix. A serious incident could arise from that ill-conceived mixture, and in my book that is just too great a risk to take.
Making profit the objective can result in corners being cut, to the detriment of all concerned. I draw the Minister's attention to the coal industry, which had a sound safety culture. It was the safest deep-mined coal industry in the world; yet this year we have seen an increase in fatalities and in the number of serious accidents. A change can be seen in the culture of industries when they are privatised, and that change is not for the better but to the detriment of the community.
The privatisation package consists of seven advanced gas-cooled reactors and one pressurised water reactor. The Magnox reactors, which are the dirtiest stations in the world, will remain in the public sector. In my view, the entire industry would be better off in the public sector. The nuclear industry's contribution to the generation of electricity is 28 per cent. of the United Kingdom's electricity needs. In Scotland, the figure is as much as43 per cent. of the need. The contribution is all base-load electricity. In other words, it is bid into the pool at zero so that it can get on to the wires. That will ensure a constant income stream for the investors in the part of the industry that is to be privatised. That is why the Government want to privatise it. In logic, that part should remain in the public sector so that the taxpayer can get the benefit of an industry that has increased its productivity to a level comparable with other components of the energy industry.
Until 1990, the generation of nuclear electricity was very costly. The advanced gas-cooled reactors produced electricity at about 5.2p per kilowatt hour, but that figure has significantly improved and is now down to 2.7p per kilowatt hour. That has been achieved in the public sector and the industry has proved itself to be innovative, efficient, safe and cost-effective. That is another reason why the Government now want to privatise it.
Much has been said about safety. I do not want to scaremonger, but I draw the attention of the hon. Member for Ayr to some of the submissions made to the Trade and
Industry Select Committee. Much has been made of the submission from Captain Killick, the former director of safety and quality for Scottish Nuclear. He said that an industry in the private sector
We have seen that happen time and again in the utilities.
Other submissions referred to the incident at Wylfa in Wales, when the station was not closed down for eight hours after a problem which could have caused real difficulties had been identified. The judge who fined Nuclear Electric said that he did not believe that commercial considerations had taken precedence. Had the industry been in the private sector, he could not have been so sure.
The Health and Safety Executive made the point in its submission that there was a tendency for the privatised industries to improve safety. I take that on board, but a leaked letter which appeared in the press last week pointed out that the cut in the budget of the Health and Safety Executive would result in a reduction in the number of inspectors and that they would therefore not be able to ensure compliance, as they had previously, in a number of industries, including the nuclear industry.
The hon. Member for Ayr will be aware of the informal network among nuclear engineers by which information on problems at one station is passed to another. I suggest that when the industry is privatised that informal networking will not take place because the different companies will see it as a breach of commercial confidentiality for one group of engineers to pass information to another group. That could cause safety problems.
Much has been said about the Heysham incident. There is no doubt that the prolonged running of the advanced gas-cooled reactors is causing concern. Perhaps the problem that was identified at Heysham is a design fault and that is what has resulted in distortion in the fuel channels. If that is the case, it means that in future the stations cannot be refuelled while they are generating electricity, which means that they will not be as viable as they have been in the past. Perhaps in his winding-up speech the Minister will elaborate on the Heysham incident and tell us whether there is a design fault.
The Select Committee was told in evidence that the liabilities amount to a massive £32 billion in undiscounted terms. The undiscounted liabilities of the package that is to be privatised are almost £15 billion. The Minister said that the liability would follow the asset, and he confirmed that today. In evidence, the Select Committee identified areas of those liabilities that were not covered. They were, for example, the reprocessing of spent fuel and the management and disposal of radioactive waste on the decommissioning of stations. Those matters were not to be covered by the segregated fund, which therefore falls far short of meeting the liabilities that the industry will have to face. The Select Committee on Trade and Industry was specific on that point. It did not think that the proposed funds were sufficient to meet the needs of the industry and it asked the Minister to look again at the segregated fund with a view to covering the gaps.
We are told that the privatisation will raise £2.6 billion, but some people suggest that it will raise only £2 billion. Perhaps the Minister will elaborate on that and give us his view of the valuation, as £2 billion is just two thirds of
the cost of building the pressurised water reactor that was officially opened only yesterday. As my right hon. Friend the Member for Derby, South (Mrs. Beckett) said, it was opened just in time to be privatised.
Mr. Alan W. Williams (Carmarthen):
I am grateful for the opportunity to make a few comments in this important debate. I start from a strongly anti-nuclear position, although I would rather see the nuclear industry in the public sector. The industry has a virtually lifelong history of loss making, and privatisation is nonsense when we consider that reactors cost about £13 billion to build and are now to be sold for just £2 billion. Decommissioning costs are projected forward 100 years, which is fairly arbitrary. If this debate were being held in 1986, we would not be speaking about a period of 100 years but about decommissioning at the end of a reactor's useful life. Perhaps in 10 years' time the policy will change again. People discount the time to a manageable figure, but it is all creative accounting.
My main concern is safety. I cannot help but feel that, when cuts are made and there is great commercial pressure, safety will be compromised. Nuclear Electric's productivity record over the past five years has been excellent, and I accept that electricity is cheaper now than it was five years ago, but that has largely been achieved by a 32 per cent. staff loss and it is projected that there could be anything up to a further 20 per cent. staff loss post-privatisation. Will that compromise safety?
My hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) spoke about the incident at Heysham, the importance of which could have a great bearing on the future of advanced gas-cooled reactors. The 70 ft fuel assembly became stuck during on-load refuelling because there were distortions in the channel. If those distortions were caused by the AGR being run flat out to make more profit for Nuclear Electric, they may occur in other AGRs. That poses questions about the future of on-load refuelling, and that means that the load factor falls substantially and eats into the economics of the privatised nuclear industry.
My hon. Friends the Members for Barnsley, West and Penistone and for Leeds, West (Mr. Battle) spoke about base load supply. The nuclear industry has a decisive competitive advantage in having 24-hour access to the national grid. Should that remain in the private sector? It is not genuine free competition. It is obvious that electricity produced by coal or gas would be much cheaper if plants could be run flat out over 24 hours.
"is likely to seek to make small erosions into safety margins for commercial gain."
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