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Dr. Rudi Vis (Finchley and Golders Green): Is it not the case that if subcontractors are not as safety-conscious as they should be, it is BNFL's responsibility to make sure that they are?

Mr. O'Neill: I do not dispute that. However, the previous Government set themselves on a particular road, and if they could not privatise parts of the nuclear industry, they wanted to outsource as much of the maintenance and engineering activities as they could. As a consequence of diktats from Ministers, there was a tendency throughout the nuclear industry to be overdependent on people who did not necessarily always have the safety awareness that they ought to have had, as is well recorded.

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We took the question of safety very seriously, and, as I said, we held long sessions and had briefings and visits. When we went to Sellafield, we were briefed by the Health and Safety Executive before we went and saw what was happening. None the less, when we put things together, we came to the conclusion that there was a case for a public-private partnership. There was certainly a case for injecting money into the industry, over and above what was coming in from the public purse for what was, in the past, a fairly profitable business for us as British citizens.

On the other hand, in the increasingly privately owned world nuclear industry, it is essential that proper commercial disciplines are introduced in organisations that still have a legitimate, but irrelevant, civil service tradition of administration. We have to get across to the work force and certain parts of the management of BNFL the message that what was good enough in the past will not be good enough in a globalised market, where there is always a downward pressure on costs and a need for a degree of flexibility in management--which have not always been the hallmarks of BNFL's operation.

People will tell us that BNFL has been extremely effective in cutting costs and has made itself more efficient. I do not deny that, but I get the impression that BNFL and other parts of the British nuclear industry have lived for too long in a kind of cosy relationship and, as we say in Scotland, have been taking in each other's washing. They would do wee numbers for people, and jobs would be done. The point is not about safety; it is largely about sound business practice, which was not always present. Business was conducted by nods and winks, and, as the books were terribly difficult to understand and follow, it was sometimes difficult to track expenditure trails through the morass of the companies' accounts system, as Gordon MacKerron of Sussex University found.

There was a veil of secrecy over the organisation, so there were understandable concerns about security and similar matters. Extremely hazardous materials are being used, so there must be a secure means of dealing with them. Indeed, it was a civil libertarian, my right hon. Friend the Member for Chesterfield (Mr. Benn), who, as Secretary of State for Energy, armed the police who guard BNFL establishments. My right hon. Friend introduced that measure because he recognised that the threat of terrorism was such that security had to be in place.

The Select Committee came out broadly in favour of the PPP, for the reasons that I gave. We were a wee bit bemused by the question of whether the Government had considered the possibility of total privatisation. I realise that the company is involved with military, security and safety matters, and there may well be a case for a PPP, but the terms of the remit given to the accountancy company KPMG, which was called in as a consultant to conduct the exercise, were very narrow. Will my right hon. Friend the Minister for Energy and Competitiveness in Europe explain why the option of full privatisation was not offered? Was that on grounds of principle or practicality? We accept that, as a result of the events last year, the date for the creation of the PPP has slipped. However, will my right hon. Friend give us an indication of when the company will be ready for a widening of ownership?

Mr. Dale Campbell-Savours (Workington): When I read the part of the report that dealt with those matters,

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I could not quite work out the motive behind the question. Why would we necessarily want to know whether that issue was included, when there would be open hostility in west Cumbria to 100 per cent. privatisation? An acceptable compromise has been made, so why was that question posed? Did people simply want to put it on the record that the option of privatisation should not be pursued?

Mr. O'Neill: As my hon. Friend knows from his long years sitting on Select Committees and on the Public Accounts Committee, we always try to establish as much of a consensus as we can. Conservative Members on the Committee may want to know the arguments for full-blooded privatisation and Labour Members may want to know the arguments for a PPP. We felt that, as an exercise in open government, there would be no harm in asking the question, and I hope that my right hon. Friend the Minister will provide clarification.

Mr. Askew told us that the targets would not be met this year, which will be important when we get to the practicalities of the PPP. He anticipated that additional, new, more stringent targets would be introduced. When are those targets likely to be published, and what form will they take? Will they be published or will they be put in the Library? We would be obliged if the Minister could give us that information.

Once the company has passed those milestones, any potential investor would like, as a matter of due diligence, to be able to read and understand the accounts. I keep coming back to this issue, because it was a recurrent theme in the Committee. The reporting accountants were instructed to look into the clarity of the accounting procedures. Can the Minister tell us what bill of health they were given?

In the Government's reply to the report, they said that there were opportunities in Japan. Can the Minister tell us what the position is now, and when, if at all, the transportation of spent fuel from Germany will be resumed? What is the state of play on the apparent disagreements between BNFL and its major customer, British Energy? British Energy has sent a document to a number of Members suggesting that it would require an immediate cut in the charges that BNFL imposes for work carried out. It is beginning to rattle the cage on the issue of storage rather than reprocessing after 2006. It is only right that we have a clearer understanding of the difficulty that has arisen between BNFL and its largest customer, British Energy.

Mr. David Chaytor (Bury, North): Does my hon. Friend agree that the issue of storage versus reprocessing has not suddenly burst on to the scene recently? It has been given emphasis because of the position of British Energy. For many years, a solid body of evidence has suggested that storage is a safer long-term prospect, and cheaper than reprocessing. Does he not think that BNFL should have grasped that nettle long before now?

Mr. O'Neill: My hon. Friend says that there is a body of evidence. There is certainly a body of opinion, but I am not sure whether the two are necessarily the same. I shall give an example. Prior to the privatisation of British Energy, the old Scottish Nuclear Ltd. was in protracted negotiations with BNFL on the processing of the Torness material. There was a debate at that time

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about whether it should be stored at Torness, and it became clear that that was as much a negotiating tool used by Scottish Nuclear Ltd. as an environmental argument. None the less, we must recognise that storage on site is desirable if we want to avoid worries about transportation.

There is also the question whether appropriate space and facilities are available on site at reasonable cost to provide the storage required. Storing is not a simple process. It is perhaps more attractive than having trains containing waste or spent fuel trundling across the country, and the worries that that would cause some people. Whether those anxieties would be justified is a different matter.

We did not want to get into that issue in any great detail. However, we recognised that it was important, and that, as a revenue stream for a company that may be partially privatised, it would be of more than passing interest to anyone involved. We want to find out the Government's thinking.

Mr. Christopher Chope (Christchurch): Does the hon. Gentleman agree with me that the Government's response to this particular aspect of our report is complacent in the extreme? They take a hands-off, "nowt to do with us" approach, and consider that this is a commercial matter for the two companies. Surely they should go to the root of the viability of any public-private partnership. We know from the Committee's other work that it is increasingly the practice in industry to work alongside suppliers. BNFL accounts for some 25 per cent. of British Energy's costs, and for them not to talk to each other and reach a common agreement on the issue is ridiculous.

Mr. O'Neill: I would not go quite as far on this issue as my colleague on the Select Committee. I think that there is an appropriate relationship between state-owned corporations that are moving towards partial privatisation. There is an arm's-length relationship, and the decisions and the responsibility rest with the company.

However, there is a problem. In some areas of reprocessing, such as MOX facilities, Ministries other than the Department of Trade and Industry are apparently reluctant to come to a decision about the licensing of the plant. We must question the working of government there. I would be happy for BNFL to have the maximum independence that it can have under the DTI within its present system of ownership. The hon. Gentleman and I agree that a public-private partnership would not be a bad thing. In order to prepare for it, BNFL's management must show that it is capable of running the company in the big, dangerous world with the maturity and independence that it has not always had hitherto.

I want to put down a marker. It is not the demonstration facility for MOX that worries me, because I realise that that is not a major issue any more. However, we need to know what will happen to the main facility that has been constructed and is awaiting licensing. If it does not appear in the corporate plan, there will be a gaping hole in the finances.

I have complained about the fact that we do not know where half the money is or where it goes--but we are now beginning to find out. It would be even more worrying if, when the plan is produced and we start to look for

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potential partners for BNFL, such issues were not properly dealt with. They must not be handled with indecent haste, but there should be a decision. Governments should not hide behind indecision on such matters. Either we take this step or we do not, and if we do not, we must accept that the company will be that much smaller and perhaps less attractive, although we do not know.

Since the report was published, we have had the rundown table for Magnox, which is helpful. However, we must ask questions about the prospects for fuel manufacture at Springfields and reprocessing at Sellafield, and what the consequences will be for those facilities given that Magnox probably has another 10 or 12 years before it is completely finished as a source of generation. We want to know what alternative uses will be sought for the Sellafield and Springfields sites.

We should also like to know more about the Magnox liabilities. The longer Magnox is in operation, the longer the period over which liabilities can be spread, whereas if the operation period of Magnox stations were contracted, the liabilities would be spread over a shorter period. It is only fair to put that information in the public domain so that the impact of the change in the timetable on those liabilities is on the record.

We should know a little more about the United States business and what has happened about Hanford. Contracts were renegotiated, and it was understandable that the problems of emerging work--as it used to be called in the refitting of British naval ships--were a lot bigger than anticipated, and the price had to be changed. A number of issues are involved, but the Hanford issue must be dealt with.

I should like to deal with another, slightly different aspect of Magnox. What income stream replacement will there be when Magnox is removed from the company's activities? Although those reactors may be the dirty old warhorses of nuclear generation, they provide about 8 per cent. of our energy requirements. They are also linked to the national grid. Therefore, as the wires are there--to put it very simply--do Ministers have any proposals for alternative generation systems that could, if necessary, be connected to the system?

Conversely, have the Government, in partnership with BNFL, considered whether there is a case for further nuclear generation? I am a bit ambivalent about that. Although I realise that, in terms of emissions, it is a very clean energy, I also know that it has problems with back-end costs and with liabilities. Nevertheless, if we want to create and sustain a proper generating mix in the United Kingdom, we have to recognise that, although windmills and wave generation may have considerable attractions, the attractions of alternative forms of generation have probably been exaggerated. I therefore think that we ignore the nuclear element at our peril.

It is rather depressing that the Prime Minister, in an estimable speech to the Green Alliance, completely ignored the nuclear option. It is as if the Government have decided collectively to run away from the issue. I think that it is an abdication of intellectual responsibility to fail to consider one of the great British scientific achievements of the 20th century and to seek to discard it, as some people seem to be doing.

I am not certain that, at this time, nuclear generation is the most economic means of generating electricity. I also recognise that it has environmental costs that are different

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in character from those associated with gas-fired or coal-fired stations. However--as I have always said, as one who has always acknowledged a constituency dependence on the coal industry--if we are to continue arguing for electricity generated from coal, we shall have to continue using the nuclear industry, for some time to come, to create some space in the envelope. We have not yet found ways of bridging the potential generating gap that will begin to emerge from about the middle of this decade.

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