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8.8 pm
Mr. Piers Merchant (Beckenham): I suppose that these days I should begin by declaring a transient interest, in that my wife and I were taken to the ballet about a year ago by Dr. Robert Hawley and his wife. He, of course, is the former chief executive of Nuclear Electric and the current chief executive of British Energy. I hasten to add that we did not discuss the nuclear industry or its privatisation. I mention that--apart from feeling that I ought to--because I know Bob Hawley well. In fact, I worked with him when he led Northern Engineering Industries, the north-east engineering conglomerate.
I am in a position to make a judgment--which is that this man has a tremendous ability in engineering, as well as great experience in private industry. I believe that he will give great leadership to the industry in the private sector. That is important because the House and the public are right to be concerned about the quality of leadership, particularly in an industry that is obviously sensitive.
I strongly support the movement of the nuclear industry into the private sector. I have become a great believer in privatisation, based on my judgment of the experience of privatised industries over the past 15 years. I did not come to the subject in any dogmatic sense and, unlike many of my hon. Friends, I did not start with a strong presumption that only the private sector could deliver the quality and efficiency that we now see in the industries that have been transferred from the state. I have applied my judgment and watched as the industries have been transferred. We have seen a watershed in the development of industry in this country. In industry after industry, successes and efficiencies have sprung from competition.
My right hon. Friend the President of the Board of Trade referred to just one statistic week, but it tells a story. Before privatisation, the industries were costing the taxpayer £50 million a week; the taxpayer is now gaining, in terms of tax paid, approximately £55 million a week. That is only one aspect of it. The benefits that have flowed to consumers are tremendous and the opportunities that the industries have been able to develop are significant.
Three areas in the nuclear industry will gain. First, the consumer will gain because the electricity industry will have additional competition, which will produce greater efficiency. We have already heard that the average electricity bill is likely to be reduced by some £20 as a result of the fall in the fossil fuel levy, which has been made possible as a result of the privatisation that is now going into effect. That benefit will be felt by every consumer of electricity.
Secondly, taxpayers will benefit directly from the proceeds of the sale. They will also benefit as a result of the transfer of liabilities. I have done a quick calculation in my head--approximately £4.4 billion-worth of liabilities will be transferred from the taxpayer to the private sector. That is a significant benefit to the taxpayer.
Thirdly, the industry will benefit in a number of ways: it will be able to make its own commercial judgments, to run its affairs free from political interference, to decide on its investment programme and its capital plans, and--perhaps most significant of all--be free to operate competitively in the international market.
That is a significant market, and a market in which British experience excels. More than 30 countries have nuclear plants in operation or are building plants that are yet to be commissioned. The expertise that the British nuclear industry has to offer is tremendous. Significant markets can be grasped and, if the industry is free to do so, it will benefit significantly. Privatisation will enable that to happen.
Understandably, there is bound to be some public concern about this privatisation. There is always public concern about change. The public have always been sceptical, if not hostile, about privatisation--but they have slowly changed their views as they have seen the successes and benefits that it has brought. This is a particularly sensitive industry and it is understandable that people should be concerned and need to be assured about the safety aspects. It is regrettable that the Labour party has, at times, sought to exploit that fear, which it knows is groundless. The subject has been examined in great detail by a number of bodies involved.
Mr. Jack Thompson (Wansbeck):
Does the hon. Gentleman recognise that there is no such thing as total
Mr. Merchant:
The hon. Gentleman is right: there have been problems relating to safety in the nuclear industry. However, I remind him that it is not the only industry to be affected in that way. We cannot guarantee total safety in any industry or in any walk of life. However, it is particularly important in this industry that the safety measures, and the policing of them, are taken to the highest level possible. I believe that they have been, and I shall return to that point in a moment.
The hon. Gentleman referred specifically to insurance. He is absolutely right: it is important that the industry is properly and fully insured. He asked me whether I believe that it is adequately insured. Yes, I believe that the arrangements that exist for the industry, and the international arrangements that underpin it, are satisfactory and sufficient to ensure proper protection in the unlikely event of something going seriously wrong.
There are nuclear power stations in this and many other countries. It is true that they pose a potential risk. However, if the hon. Gentleman imagines that there is a link between the extent of safety protection involved and the nature of the ownership, I hope that I can convince him that that is not the case. The Trade and Industry Select Committee looked at this issue thoroughly, and it concluded that there was no reason why there should be any greater safety risk under privatised ownership than there had been under state ownership.
The Health and Safety Executive has examined the problem, and it has said that there is no evidence to suggest that there would be any greater risk under privatisation. The industry has also been examined by the World Association of Nuclear Operators, which has said that there is no evidence to suggest that a privately owned industry carries with it any greater safety risk.
I believe that the reverse is true. The hon. Member for Wansbeck (Mr. Thompson) mentioned the horrific accident at Chernobyl. I remind him that the Russian nuclear industry was not in private hands. Indeed, one could say that the Russian nuclear industry was operating in a society that had taken state control to its ultimate conclusion. The significance of that is that there is a tendency in a command economy for the individuals within the structure not to feel a personal responsibility. Therefore, corners are cut, the buck is passed and the system--in this case, the vital safety system--collapses. That is precisely what happened at Chernobyl.
Mr. Purchase:
Will the hon. Gentleman concede that the incident at Three Mile Island occurred while the industry was in private ownership? Is he aware that the costs resulting from that incident have not yet been resolved?
Mr. Merchant:
I am aware of those factors, but the worst nuclear accident occurred at Chernobyl. I do not
Lady Olga Maitland (Sutton and Cheam):
Does my hon. Friend agree that there is a great danger of unfounded scaremongering on that point? The allegations made by the hon. Member for Wolverhampton, North-East(Mr. Purchase) about the Three Mile Island incident are not properly founded in fact, and that point has been well established.
Mr. Merchant:
My hon. Friend is correct. I wish to quote the comments of two organisations on the safely issue as I believe that it is important to lay to rest the myths that have been propagated in that area. The leading economic consultants, NERA, recently published a report on the impact on safety of privatisation in a number of industries, including the nuclear industry. It concluded:
Significantly, the people within the industry will ultimately ensure that high standards are achieved. Within British Energy, we have highly qualified, highly motivated engineers, nuclear scientists and managers who have an absolute interest in safety. They will not compromise their standards, quality or integrity in any way. I have complete faith in them. If their integrity is questioned, they know that they ultimately carry personal
responsibility within a privatised set-up--far more than in the state sector. If anything goes wrong, there will be no hesitation in pointing the finger at them as individuals. Therefore, they will not take any risks.
"Occupational safety standards have improved in nearly all of the privatised firms and industries. In some cases the extent of improvement"
in safety standards
"has been significantly greater than elsewhere in the economy . . . the incidence of such injuries"
to members of the general public
"is very low on average across the privatised firms and industries . . . the performance of privatised companies has improved strongly since privatisation".
My second quotation comes from British Energy.I think that it is important to take account of its view, as it will ultimately be responsible for the industry. Peter Haslam, the director of public affairs, wrote to me in March. He said:
"Whilst the regulatory regime in relation to safety will remain fundamentally unchanged, some people may see the relationship between the NII and the Company as more transparent than whilst both were in the public sector. Safety is paramount and both Nuclear Electric and Scottish Nuclear have a Director with responsibility for safety who reports directly to their respective Chairmen. Each event of any nuclear safety significance is investigated with the utmost rigour and importance is placed upon creating a culture of openness. Moreover, the companies achieved a very real improvement in their safety records from the time of Vesting hand-in-hand with a much improved commercial performance. Profit and safety are not antithetical".
I stress that it is clear that the nuclear industry will maintain safety as paramount. None of the structures that have been set up will be diminished--indeed, they will be enhanced. The independent role of the nuclear installations inspectorate and other agencies responsible for safety will be retained. Those independent bodies will ensure that standards are maintained.
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