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15 May 1996 : Column 931

Oral Answers to Questions


British Energy (Privatisation)

1. Mr. Eric Clarke: To ask the President of the Board of Trade if he will make a statement on progress towards the privatisation of British Energy. [28355]

7. Mr. Foulkes: To ask the President of the Board of Trade if he will make a statement on progress towards the privatisation of British Energy. [28362]

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Ian Lang): Privatisation of British Energy remains on track for July.

Mr. Clarke: Now that the Government have admitted that there is a £3.8 billion cost liability for the Magnox stations, which is causing a £1 billion shortfall in the sale of British Energy, is it not time that the privatisation was stopped because it is a raw deal for the taxpayer and a shady deal for shareholders?

Mr. Lang: It is typical of the Labour party that, while it claims that it is no longer against privatisation, it has opposed, and continues to oppose, every privatisation. The Magnox stations are not being privatised and their liabilities will remain with the Government. The liabilities of the non-Magnox stations will pass with the assets into British Energy and will be privatised. That is an entirely proper and sensible procedure that will generate substantial funds for the benefit of the taxpayer.

Mr. Foulkes: Is not the truth that the Secretary of State has no strategy for energy but is lurching from one decision to another? Will he admit that the sale of British Energy is likely to be postponed by a second inquiry by the Monopolies and Mergers Commission? Since, as my hon. Friend the Member for Midlothian (Mr. Clarke) said, it is a bad deal for the taxpayer and a bad risk for the shareholders, will he agree that the privatisation should not go ahead and call it off now?

Mr. Lang: No, I have no intention of calling it off. As I said in response to the initial question, privatisation of British Energy remains on track for July. The nuclear industry has improved beyond measure in recent years. Nuclear Electric's output has increased by 39 per cent. and Scottish Nuclear's output by 38 per cent. Sizewell B has been constructed on budget and on time and will reach full load in July. The nuclear industry is doing well and will do even better in the private sector.

Mr. Dover: Will my right hon. Friend the Secretary of State confirm that the biggest advantage of privatisation is that the risks and opposing investment priorities disappear? The private investor, or shareholder, will take the risk. We shall ensure that the nuclear industry goes forward rather than backward and ends up paying a lot of corporation tax into the Exchequer.

Mr. Lang: My hon. Friend is right. Before the Government's various privatisations, the nationalised

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industries were costing the country £50 million a week. They are now generating very much more than that in revenue to the Exchequer. Nuclear Energy, once it is privatised, will help to contribute to that by raising substantial proceeds for the taxpayer, and, by making its own investment decisions in future, it will become even more competitive and productive than was suggested by the figures that I gave earlier.

Mrs. Beckett: Surely the Secretary of State and his colleagues should ensure that people who might buy shares in British Energy are properly warned of the scale of the risk that they are undertaking. The hon. Member for Chorley (Mr. Dover) talked about the risks and liabilities disappearing. They are not disappearing. If the Government stick to their word for once, they will be transferred to private shareholders. Will he confirm that, against liabilities stated by British Energy to be set at an undiscounted figure of £14.6 billion, the only special provision being made is a fund of £16 million a year? Is that not another example of the Government's incompetence and neglect--even of the interests of shareholders?

Mr. Lang: I think that the hon. Lady is getting a little muddled. The liabilities pass with the assets to British Energy. On privatisation, British Energy will make an initial endowment to the segregated fund of £228 million and, thereafter, will make contributions, which will initially be at £16 million a year. That is the result of careful calculation of the appropriate figure necessary to meet on-going liabilities. It will enable British Energy, the nuclear industry, to be privatised. All the details will be set out appropriately in the prospectus. It is typical that the Opposition try to talk down such privatisations and try to undermine flotations, and are thus operating against the interests of the British taxpayer.

Social Chapter

2. Mr. David Atkinson: To ask the President of the Board of Trade what assessment he has made of the effect of adherence to the social chapter on the hotel and guesthouse sector. [28356]

The Minister for Competition and Consumer Affairs (Mr. John M. Taylor): Embracing the social chapter would seriously damage competitiveness and employment in all sectors of industry because it would allow the United Kingdom to be out-voted on measures imposing unnecessary burdens and costs on businesses.

Mr. Atkinson: Is my hon. Friend aware of the representations that I have recently received from a major hotel chain in my constituency warning me that a national minimum wage would reduce jobs and training, encourage hotels to get out of tourism altogether in favour of residential redevelopment, and have an altogether devastating effect on the ability of Britain's tourism industry to compete successfully against cheap holidays abroad? Between now and the general election, will my hon. Friend and his colleagues warn against the dire consequences of the Labour and Liberal parties' national minimum wage on one of Britain's most successful industries--tourism?

Mr. Taylor: The two greatest threats to the tourist industry and the hotel trade generally are the social

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chapter and the minimum wage. They will get neither from the Conservatives; they will get both from the Opposition. The more that we tell people that, the better.

Mr. Barnes: Why, after 17 years of Conservative Government, cannot we have some basic decent standards in the hotel industry? The Minister's answer is a disgrace. If the Government think that the policies coming from the European Union and the Opposition's minimum wage are incorrect, what is their answer to the problem?

Mr. Taylor: The British tourist industry has some of the highest standards in the world, not least in London, and in the provinces too. The question is what would happen to that excellent tourist industry if Brussels interfered. That would be unnecessary and dangerous. It would upset the successful job-creating balance that we now have in the industry.


4. Mr. Batiste: To ask the President of the Board of Trade what steps he is taking to promote the use of the Internet in the United Kingdom. [28359]

Mr. John M. Taylor: My Department is involved in a range of initiatives helping users to gain business benefit from electronic networking, including the Internet.

Mr. Batiste: Can my hon. Friend confirm that it is important to British industry that school leavers should be familiar with the Internet? Can he further confirm that cable companies, such as Bell Cable Media in Leeds, already offer schools free connection to the Internet and, on top of that, a valuable package of services without charge? Does that not demonstrate the utter sham of the sweetheart deal between the Labour party and British Telecom, a deal that undermines competition and gives nothing to the British public?

Mr. Taylor: I completely agree with my hon. Friend about the deceitful sham and I confirm both the points that he made about the excellent promoters of cable, particularly in his constituency. I also confirm that a number of companies are already offering schools free access to the Internet. We do not propose to reverse our consistent policy preventing BT from broadcasting over its existing national network. Yes, the cable companies are doing it free. That should be welcomed.

Mr. Hoon: If the Minister is so keen to promote the use of the Internet, what steps does he propose to take to ensure that all Internet service providers enjoy access to the network on consistent terms and conditions? In particular, does he agree with Oftel's recent consultation document, "Promoting competition in services over telecommunication networks", which says that Internet's services should be reclassified as systems business?

Mr. Taylor: The information society initiative, launched by my right hon. Friend the President of the Board of Trade, is illustrative of the Government's attitude to these fast-moving developments. The Government are not being interventionist--nor should we be--but we are helping

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new and inexperienced users, such as small firms, and we have expressed our total approval of the developments in schools.

Mr. Waller: What backing is the Department giving to the information society initiative, promoting the use of communications technology? What response have the Government received from industry?

Mr. Taylor: Two pilot schemes are running in Manchester and in Harlow. The Government have committed £35 million in new funding, and we are encouraging smaller users in particular to see the great commercial advantages that are available to them and to their businesses from the Internet. A clear trend is emerging from the Internet. Its commercial application makes it buoyant, and the level of participation will continue to rise.

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