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Mr. John Whittingdale (Maldon and East Chelmsford): I thank the Secretary of State for letting me have an advance copy of her statement. I also declare an interest in that my constituency contains Bradwell power station, the oldest commercial nuclear station, which is scheduled to commence decommissioning in just four months.

In principle, we broadly welcome the Government's decision to transfer the civil nuclear liabilities of BNFL and the UKAEA to the new LMA. As the Secretary of State said, the nuclear industry is unique in that the liabilities created by building and operating nuclear power stations stretch into the future for up to 100 years. As a result, any calculation of their size on a discounted basis is so dependent on assumptions that any figure is largely notional.

The restructuring announced by the Secretary of State is a book-keeping exercise to the extent that it transfers liabilities from one state-owned entity to another. I would be grateful if she made it absolutely clear that there is no additional cost to the taxpayer, either now or in the future, as a result of that change.

Will the Secretary of State confirm that the principle set out under the Conservative Government that liabilities should remain with assets has not been breached? Will the nuclear liabilities remain with the Department of Trade and Industry budget, and how will they be treated by the Treasury under resource accounting procedures?

Will the Secretary of State give more details of the amount accumulated by BNFL to meet the future cost of liabilities that will also be transferred to the LMA? Will she confirm that it is about £8 billion and that, under current estimates, it should still be sufficient to meet about 80 or 90 per cent. of the cost of the future discharge of those liabilities?

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On BNFL, will the Secretary of State confirm that the technical insolvency to which she referred results from historic liabilities that will go to the LMA and that the company should be able to operate profitably on a purely commercial basis? Will she make it clear that this is not another Railtrack and that the restructuring does not represent a handout to the company from the taxpayer?

Will the Secretary of State say what discussions have taken place with the European Commission about whether clearance is required for the changes under the rules governing state aid? Will she confirm that, having removed the liabilities from the company, there is no reason for it to remain in public ownership?

What is the justification for a public-private partnership? Does the Secretary of State accept that there is no longer any long-term strategic reason for the company not being 100 per cent. private sector owned? What is the long-term future for the UKAEA and might it, in due course, be transferred to the private sector?

Will the Secretary of State say why it was decided that the Sellafield mixed oxide plant and the thermal oxide reprocessing plant should also be transferred to the LMA? Will she state for the record that that is not related to the viability of those businesses, following the MOX data falsification problems in 1999?

What implications has the restructuring for BNFL's existing employees, many of whom are my constituents? If BNFL is to continue managing both the Sellafield site and the Magnox stations, will the employees remain employed by the company with no effect on either their conditions or their job prospects?

Will the Secretary of State confirm that the LMA will put the operation, management and eventual decommissioning of the Magnox stations and Sellafield out to competitive tender? Can she say whether that will apply to Bradwell power station in my constituency, which will stop generating in March?

Will the LMA operate on an independent basis? Does the Secretary of State envisage that it could become responsible for the whole nuclear waste inventory if British Energy chose to contract with it? Can she say what arrangements will be made to ensure proper financial accountability? Will the LMA also retain responsibility for proper third-party liability insurance against the possibility of a nuclear accident at one of the plants that it owns?

The Secretary of State will know that significant liabilities remain with British Energy, relating to the power stations operated by that company. Can she say what is the Government's attitude to British Energy's request that responsibility for the pre-1996 spent fuel and waste liabilities, relating to electricity generated when its nuclear plants were in Government ownership, should also be removed?

I understand that the energy review being conducted by the performance and innovation unit has not yet been completed, but does the Secretary of State accept that her statement has considerable implications for the whole future of nuclear power generation in this country? Does she accept that one aspect of that is the need to establish a common United Kingdom solution to the problem of waste management? Does she recognise that until it is established, no decision will be made on whether replacement nuclear power stations will be built? Does she accept that the seven-year time scale proposed by the

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Minister for the Environment for the radioactive waste management review is wholly unacceptable, and is being viewed as a means of blocking any future development of nuclear power, whatever the outcome of the PIU review?

Ms Hewitt: I shall do my best to respond to the hon. Gentleman's numerous questions.

I can readily confirm that, as I said in my statement, there is no change in the overall public sector liabilities. The liabilities will indeed be held on the DTI balance sheet. We will look at resource accounting and budgeting in more detail in due course. The assets and the liabilities will be transferred together to the LMA when it is created.

I can also readily confirm—although I was surprised that the hon. Gentleman raised the issue—that BNFL is certainly not Railtrack, and that we are not in the process of bailing anyone out. Let me add that, contrary to reports that I understand featured on the BBC this morning, this is not about privatisation. As I said in my statement, a public-private partnership remains a target for BNFL. We recognise the potential benefits of a PPP for BNFL's businesses and for liabilities management at Sellafield, but a great deal must be achieved if that is to be possible—which is why we will reconsider it in 2004–05.

We do not believe that state aid issues are implicit in the arrangements, but we are discussing that with the European Commission.

The hon. Gentleman mentioned the Sellafield Magnox plant and THORP, and whether they should be transferred to the LMA. We have considered that carefully. It is clear that it would be immensely damaging to our prime objective—safe and responsible management of the liabilities—for the Sellafield site to be split.

We are not prepared to compromise safety by splitting the site. Therefore, THORP and the Sellafield MOX plant will transfer to the Liabilities Management Authority.

I am sure that the hon. Gentleman will agree that employees' skills and expertise, and the efforts that employees are making in the company, are hugely valuable and admirable. No change for the staff at BNFL arises from the proposals, except perhaps the prospect of greater work as the company develops its business. We shall set out in the White Paper to which I referred our proposals on the detailed operation of the LMA. However, when the LMA is placing contracts for work, I should expect that to be on the basis of competitive tendering.

The hon. Gentleman raised the issue of British Energy. It is in a different position, and the issue of its liabilities was settled before it was put into the private sector some years ago.

Finally, on the broader issue of the United Kingdom's energy needs and our future strategy, we are undertaking in the PIU study a comprehensive review of the UK's energy objectives and how those are best met. The question of any new nuclear power stations will of course be for the generators. As I understand it, none of them has yet come forward with proposals for new nuclear build. However, the overall strategy will be considered by the Government in the light of the PIU energy review and its report.

Dr. Jack Cunningham (Copeland): I warmly welcome and strongly support my right hon. Friend's important

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statement, which at long last begins seriously to address issues that have been neglected for too long. Her statement will be widely welcomed in west Cumbria, not only on the Sellafield site by employees of BNFL and of the United Kingdom Atomic Energy Authority, but much more widely across the north-west of England—in Lancashire, Greater Manchester and elsewhere—where many of the very large contracts placed by BNFL employ many thousands of engineering workers.

I welcome the decision to create a Liabilities Management Authority as an important step forward in this policy development, but I have two questions about the move. First, what nature does she envision for the authority? Will it be a public limited company or an executive agency, or will it have some other public body status? It is important that we make that decision very quickly. We certainly do not want a hiatus in the considerable improvement in dealing with those problems of historic wastes at Sellafield and elsewhere.

Secondly—this is a fairly important question as we know what Chancellors of the Exchequer are like—will the investment fund and the income that it earns be ring-fenced for the sole use of the authority? It is important that we make that clear, too.

My right hon. Friend is absolutely right to resist suggestions that management authority on the Sellafield site should be divided. We have been down that route once, with the previous board of the company, and as we all know that was disastrous. She must retain a unified management structure there. She must ensure that none of the changes undermines the increasingly successful management and operation of the Sellafield site, where continuing improvement is necessary.

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