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Mr. David Drew (Stroud): Does my hon. Friend accept that part of BNFL's importance lies in its links with Westinghouse and fourth-generation reactors? Does he also agree that if we do not proceed with that technology, the French or perhaps the Americans will lead the way? There is no doubt that we will need new nuclear capacity.
Mr. O'Neill: The worst argument for any form of energy technology is that if we do not build it, someone else will. The history of the British electricity generating industry is littered with mistakes that are the consequence of such arguments. Across the country, we have power stations that were built because boiler suppliers were running out of orders. People have said, "If we try just a wee bit harder, we will have generators"--advanced gas-cooled reactors, pressurised water reactors, and Magnox, although not the latest ones--"with one type or another of the Union flag wrapped around them." We tend to go for such generators not because they provide safe and cheap energy, but because they create a lot of jobs at the same time. I think that we should have a single- mindedness about the way in which we consider power generation.
As I said, in such a complex business there are other problems, such as the continuing anxiety about safety. Whatever happens, people will worry. The Dounreay situation is one of the interesting aspects of nuclear generation that the Committee investigated. Although it is one of the smaller-scale operations, in some ways Dounreay is just as dirty and difficult as others. In Scotland, and especially in the north of Scotland, there was anxiety about the condition of the site, safety procedures, its evident past sloppiness, and the fact that we now have to reap that whirlwind. However, under the United Kingdom Atomic Energy Authority, and particularly with the leadership of John McKeown and his colleagues, there has been a transformation not only of the site but of the public's attitude towards it. Those anxieties have been largely diminished.
There is a very vigilant group of individual critics of many of Dounreay's previous activities, but in evidence taken by the Committee, we saw a noticeable shift in their attitude. They were not embracing the facility, but they were certainly much less worried about it than they had been.
I look forward to a public-private partnership involving BNFL, although I do not know as yet what activities it will engage in. My colleagues and I have as many unanswered questions as answered ones, as the situation was not clear when we were investigating. However, it is fortunate that we are having the debate today, when the Government and BNFL can look at the situation with a rather more detached and cooler eye than was available earlier this year to the new management.
My colleagues and I look forward to a public-private partnership. We think that BNFL can operate at a world-class level in various sectors of the nuclear industry, and that it has a tremendous contribution to make to British technology and science and to the economic well-being particularly of the north-west of England, and especially of Cumbria, where so many good jobs have depended on BNFL for so long.
6.46 pm
Mr. Michael Jack (Fylde): I congratulate the hon. Member for Ochil (Mr. O'Neill) and the Select Committee on Trade and Industry on their report. His speech and the Committee's conclusions touch on some of the most important issues surrounding the proposed BNFL public-private partnership.
I have a strong constituency interest in the matter, as the Springfields works are just outside Preston. When strangers come to my constituency and see the lovely, low and, in many cases, modern facilities, and ask, "What goes on in there?", to shock them I say, "That is the home of the United Kingdom's nuclear fuel manufacturing capability." It always surprises them. Great investment has gone into Springfields.
I have also had the pleasure of meeting Springfields' work force and management, who are dedicated to quality, cost reduction and competitiveness. Although all those are buzz words, they are also real words that entail efficiency in modern business. They also demonstrate that, mentally, in their approach Springfields' work force and management are very much in the private sector. Although they very much welcome the proposals for a public-private partnership, as the Committee Chairman indicated, some may even be thinking more about full-scale privatisation. However, if the Government wish to pursue the PPP model, it is our job to discuss the industry's needs within that context.
So often when we discuss British Nuclear Fuels, the difficulties of the right hon. Member for Copeland (Dr. Cunningham) and his constituents tend to dominate the debate, whereas the business's front and clean end--the manufacture of nuclear fuel--tends not to receive so much attention. However, BNFL's takeover of Westinghouse Electric Company's business has had great implications. It has absorbed into its midst not only a private enterprise, but the heart of world nuclear fuel manufacturing. It also demonstrates the difference in approach between BNFL's fuel and reactor services division and its other divisions.
As BNFL's latest report indicated, those services are seriously big business: £730 million of BNFL's turnover is accounted for by the fuel and reactor services division. Although there have been natural growing pains as the company has taken on Westinghouse's responsibilities, that is driving the thinking about the fuel division and its future. I shall develop one or two of those points in a moment.
I was grateful to the Select Committee Chairman for sharing his observations on the Prime Minister's speech on the environment. However, I do not want to get into the realm of party political point scoring, as the matters that we are debating are too serious and affect the livelihoods of thousands of people in my constituency whose jobs depend on the nuclear industry. Nevertheless, if we are to ensure that the British nuclear industry is
effective and that, in the not too distant future, it will be capable of seriously considering investment in new forms of nuclear generating capacity, we have to address some strategic issues. According to figures supplied to me by the company, in 1999-2000 our nuclear industry, BNFL and British Energy, will together have avoided the emission of about 79 million tonnes of carbon dioxide.I do not want to strike an unnecessarily controversial note with the Minister at this early stage, but in response to a question I had tabled inviting her to give me some feedback on the impact that the closure of the Magnox stations would have on the Government's meeting of its Kyoto targets, she rather surprisingly said that there would be no impact. There may well be some statistical reason for that, but--in the light of a point that I shall make shortly--I think that it would be useful to have it put on record why there will be no impact, given the likelihood of the closure of a major part of our nuclear generating industry over the next decade. We should view the matter in a European context. The nuclear energy generating industry avoids an emission of 800 million tonnes of carbon dioxide, and the European Union's Kyoto target of an 8 per cent. reduction in the emission of greenhouse gases is equivalent to 400 million tonnes of carbon dioxide. That makes clear the importance of the nuclear industry.
When preparing for the debate, I visited BNFL's Springfields plant. I asked members of the work force to come and talk to me, and over 130 did, at two meetings. I told them that the debate represented a fairly rare opportunity for the House of Commons to discuss the nuclear industry, and that I wanted my questions, and the views that I would express, to be theirs rather than mine. A common theme in what they told me was their wish for the Minister to make a clear statement about how the Government see the strategic position of nuclear generation in this country.
We can all talk about the business advantages of a public-private partnership or of full-scale privatisation, but we must ask what is the purpose. Part of it will be to change the business culture of BNFL. In this year's annual report, Hugh Collum said:
- We have set priorities for each business group to deliver their own short term targets; the continued prospect of a Public Private Partnership will provide a powerful incentive to improve performance.
The main message from the work force at Springfields is, "We are as good as anyone in the world at making nuclear fuel, and we want to be given the opportunity to show what we can do." For example, at present they do
not make any of the pressurised water reactor fuel. It is a commodity in world terms, but they recognise that through quality comes safety, and that through a combination of quality, safety and excellence comes reduced cost--and an opportunity for them to compete again for parts of the nuclear fuel business to which they currently have no access. If that is to be turned to commercial advantage, the public-private partnership will be an extremely good way of ensuring that the commercial potential of the fuel division is properly realised.The Chairman of the Committee used the word "openness", and I concur with him entirely. I think that the fuels division is, if anything, more open than the back-end business, by the very nature of the occupation; but I pay tribute to BNFL. Who would have thought a few years ago that tens of thousands, if not hundreds of thousands, of people would go every year to a location next to the most radioactive site in the United Kingdom to learn about the nuclear industry? BNFL has provided for just that with its visitor centre, and efforts are made at the Springfields plant to give the local community a greater understanding of the industry.
That is welcome--it is a way of demonstrating that nothing is happening in the industry of which people should be frightened. When the workers at Springfields are asked about their reaction to what happened at Sellafield, they make the powerful point that they live in local communities and are answerable to local people, and run a safe ship. They deeply regret what happened, but they have pride in their work. Springfields, in Lancashire, is one of the beacon locations for high quality, high-precision engineering.
At a time when our manufacturing industry is under pressure, the advent of a public-private partnership and the opportunity for more investment will prove a very good way to sustain an industry in which the United Kingdom has considerable expertise and demonstrates considerable excellence. The Committee Chairman rightly reminded us of that.
There is, however, a downside of openness. Sometimes BNFL says that it will not do something, for quality reasons. For example, the company--in true private- sector mode--told British Energy, its main customer for advanced gas-cooled reactor fuel--that it was not satisfied with a particular batch of fuel rods, and would withdraw it because it was worried about the weld. It was then vilified in the press because it had taken up an issue relating to safety and quality control.
Let me return to my meetings with members of the work force. They would like us to talk more positively about the company's good points, because most discussion has been about the difficult aspects. Here is a responsible company, which is prepared on occasion to say to its principal customer, "We are not sending you this product because we are not satisfied with it." That is good management. We should encourage it, and the attitudes in the work force that go with it.
I think that it would be helpful to the work force, in the context of the industry's future, for the Minister to address the strategic issues. Those workers asked me, "If we are to see the decline of the Magnox stations, what is the potential for investment in new techniques such as Magrox, a new reactor design such as the AP600, or the
introduction in the United Kingdom of the pebble bed reactor system in which British Nuclear Fuels in South Africa has already taken a minority investment stake?"On my recent visit, I found it interesting to observe the positive attempts that are being made to find ways of developing new designs at an affordable price, commensurate with benefits to the environment. I think that it would be helpful, while the Government own BNFL, to know how they feel about the subject, because I was asked more questions about it than about anything else. We can talk about new business arrangements and other procedures until the cows come home, but the people at Springfields want to know what is their future--and their future lies in the ability to make high-quality nuclear fuel for a long time to come.
The workers are also concerned about the impact on their business of the new electricity trading arrangements. Perhaps the Minister will say a word about that. Does she feel that the system does not properly recognise--as does the climate change levy--the benefits that can be gained from the nuclear industry? There was a feeling among the work force that coal had benefited once again, in terms of the structure of the electricity trading market, to the detriment of clean fuel technology.
Without doubt, the fuels division is ready for the competition that may result from the public-private partnership and the further introduction of private-sector techniques. However, as the Select Committee noted, the fuels division operates in a commercial world and it is right to place it in a commercial environment. That is the best way for it to learn how to react to competition from world companies such as Siemens, and others.
The future business strategy will also be influenced by the public-private partnership. For example, the fuels division will have the opportunity to enter manufacturing for eastern bloc companies with the so-called VVR system of fuel. Another matter to be resolved is the future of hexafluoride production. Such major commercial decisions must be taken in the context of a clear understanding of when the public-private partnership will come into being.
I welcome this debate on the nuclear industry, in the context of the public-private partnership proposal. I hope that the Minister, when she winds up the debate, will say more in response to the many important points raised by the hon. Member for Ochil and by the conclusions of the report from the Committee that he chairs.
My constituents who work at Springfields want to know about the future of their business. They are anxious to take on the burden of more competition. They know that they are good, and they are dedicated to quality. Above all, they are dedicated to safety, but they want this debate to give them a clear indication as to the future of their industry.
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