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Mr. Wilson: Will the President give way?
Mr. Lang: I give way to the hon. Gentleman, as this is a matter that concerns his constituency.
Mr. Wilson: Since the possibility of a Hunterston C appears to be precluded by privatisation, it is very important for employment in my constituency to know whether there would be any inhibition to Magnox Electric building on the Hunterston A site, which it will inherit, perhaps for non-nuclear generation. Would be there be any such inhibition?
Mr. Lang: That is not a matter on which I have any decision or any position to announce tonight, when we are debating the privatisation of British Energy. That is a matter for the future. Magnox will remain in the public sector.
We have seen tonight that not only is the Labour party deeply embedded in the old attitudes of clause IV of its constitution, but Labour Members do not understand what privatisation is about.
Last week, Labour launched another of its great attacks on the Government, which was going to be the greatest assault on this privatisation exercise, called its triple whammy--and it was wrong on every point. First, Labour alleged that the Government would not ensure that Magnox had sufficient assets to cover its nuclear liabilities. That simply is not the case. Secondly, Labour said that the cost of reprocessing British Energy's spent fuel would be left with the Government. It will not. That will be met by British Energy as part of its normal commercial operations.
Thirdly, Labour said that the United Kingdom's insurance arrangements are not in accordance with international conventions on civil nuclear liability. In fact, the United Kingdom's own insurance requirement is many times higher than the minimum required under the Brussels convention, and among the highest of all the signatories to that convention. Each and all of those accusations were wrong: not only wrong but fundamentally ignorant of the basic principles of privatisation--not a triple whammy, but a triple boomerang.
Far from nuclear privatisation being a disaster, as the Opposition would try to have people believe, excellent progress is being made. All the major milestones have been reached successfully and to timetable. The next stage will be the issue of the retail prospectus next week, on 26 June.
Mr. Martin O'Neill (Clackmannan):
I welcome the debate. We are in the middle of the nuclear flotation. We have discussed the nuclear industry three times in the past two years--at the time of the nuclear review, on the announcement of the Government's intention to privatise and, recently, following the publication of the Trade and Industry Select Committee report.
Many right hon. and hon. Members were, and are, opposed to the principle of privatisation. My all-party colleagues on the Select Committee expressed their greatest concerns about the taxpayer's interests and were worried that there would be a quick, cut-price sale. Their anxieties centred on the main issues of the valuation of the assets, the definition of the liabilities and the liabilities' subsequent valuation. A distinction must be drawn between what constitutes a liability and what that liability is valued at.
My right hon. Friend the Member for Derby, South (Mrs. Beckett) has already described the doubts that surround the valuation. It seems strange that power stations costing more than £3 billion to construct should be sold for between £1.6 billion and £2.6 billion. At the time of the initial valuation discussions, parallels were drawn with the car leaving the showroom and the change in its value at that time. Of course we all recognise that the price will fall; but when VAT, excise duty and delivery charges do not have to be taken into account, the price will fall very quickly.
Since the last debate on this subject, and since the announcement of the flotation, a report has been published on the annual segregated fund changes by Professor Sadnicki. The paper was prepared for a local authority pressure group that is opposed to nuclear power. There has never been any secret about the author's concerns about the economics of nuclear power. Nevertheless, he and Dr. Gordon McKerran of Sussex university have been influential in constructing models on which the pricing of nuclear energy has been estimated. It is no secret, either, that their work in large measure informed the Government's nuclear review, in terms of the pricing of units of nuclear energy. It could also be argued that their work was influential in persuading the Government not to proceed with the construction of any more nuclear power stations. It certainly influenced British Energy's intentions not to proceed with any nuclear power station construction in the foreseeable future.
The report cannot be lightly dismissed. I do not agree with everything in it; some of its assumptions are over the top and are not necessarily designed to impress accountants--ultimately it is their view that must be taken into account.
Perhaps the Minister will deal this evening with the point that contributions to the initial transfer of the assets may constitute a subsidy under European law. Would they contravene European legislation? It would indeed be embarrassing for the Government if the money that they used as a sweetener for privatisation were found to be contrary to European policy.
The author of the report takes as his outside limit for such contributions a sum of £208 million a year, which compares with the £16 million that the Government have been talking about. I do not think that a realistic figure. I think that £127 million is rather closer; it is achieved by assuming average economic growth of about 2 per cent. until 2026. I am not altogether confident that the Labour Government who will take office next year will stay in power that long, but the lamentable economic growth record of the past 17 years will not necessarily prove to be the model for what will follow.
Why do not the Government mention long-term items such as post-operation waste charges and post-operation payments for BNFL decommissioning? The report's author doubts whether British Energy's commercial freedom can be squared with reassurances that, where liabilities arise, they will be met. If liabilities fall where the assets are, that may restrict British Energy's ability to perform according to the market's wishes. It is pointed out in the report that any surpluses from the constituent elements of BE will be given not to the taxpayer but to Magnox for its liabilities. No one will have been convinced by the superficial gloss that the Secretary of State put on the question of the Magnox liabilities.
The report also raises the issue of post-operational reprocessing and stage 1 decommissioning of the advanced gas-cooled reactors. There is also the problem of the ability of Sizewell B to make contributions after 2025. The lifespan of Sizewell B cannot be guaranteed, so it would be imprudent to make early financial forecasts on such an optimistic view of its time in service. The point is underlined by questioning of the estimates for decommissioning and waste disposal.
We have been repeatedly told by Ministers that liabilities will follow assets, but the figures in the report suggest that the accounting procedures will not be
sufficiently transparent. Throughout its history, the nuclear industry has been shrouded in secrecy. To some extent, that was inevitable because the industry's purpose in the early days was the production of nuclear weapons, but when the veil has been lifted, there have always been expressions of false optimism--about the value of certain technologies, the cost of certain projects and the predicted cheapness of units of electricity.
Those shortcomings have been seized on by the industry's detractors, and when combined with the--often wholly unsupported--assertions about safety, the technology has been dismissed out of hand.
I believe that the case for nuclear power can and should be made. However, I have never made any secret of my opposition to privatising nuclear power. I am realistic enough to know, though, that once it has been sold off, it will not, barring a catastrophe, be brought back to the public sector. I hope that the debate will give due warning to those considering investing in the industry that the sums do not add up. Later on, taxpayers will not take kindly to being asked to cough up more so as to subsidise the segregated fund.
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