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Ms Hewitt: I am very grateful to my right hon. Friend for his welcome for the proposals and also for his reference to the workers not only in his constituency but across Cumbria and the north-west. I hope that the assurance of their future will be particularly welcome in the light of the devastating effect that foot and mouth disease has had, in particular, on the economy in Cumbria.

I am also grateful to my right hon. Friend for his question on the precise status of the Liabilities Management Authority. It will be neither a plc nor an executive agency, but a statutory non-departmental public body that will be accountable to Ministers, and through us to Parliament, for the management of the liabilities.

The funds currently with BNFL for meeting the cost of the liabilities will transfer with other assets to the LMA, and they will indeed be ring-fenced as my right hon. Friend has requested.

Mr. Andrew Stunell (Hazel Grove): I thank the Secretary of State for her statement, which was complex and comprehensive. She confirmed that the THORP and MOX plants form part of the assets that are to be transferred to the LMA, perhaps in an implicit admission that they are liabilities rather than assets, but there is also an operating nuclear plant on that site. Is it her intention that it should also be taken over by the LMA? Would not that give the LMA a range of functions that would be inappropriate given its strategic direction?

I note that, in essence, the statement said that any plans to privatise even part of BNFL have been delayed for two years. The Liberal Democrats welcome that delay and

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hope that it will be extended. Our view is that BNFL has been a huge and expensive nuclear dinosaur. It made big losses last year and it has massive liabilities. Does the Secretary of State agree that she is fattening up the balance sheet of BNFL by taking away those liabilities and defying a central tenet of environmental policy—that the polluter pays for the mess that they create? Does she further agree that her proposals will give a massive subsidy to the nuclear industry at a time when UK energy policy is in the middle of a fundamental review? Will not any subsidy or write-off of debts now undermine that review and also possibly breach EU competition rules?

Are the liabilities now being transferred intended to be joined by additional liabilities created in the future, either by BNFL, by the UKAEA or by a future nuclear programme? Will we obscure the transparency of waste-generated costs in the future? Will the public have to bear the liabilities incurred by the Sellafield MOX plant in their entirety? In what way will the economics of the MOX plant be translated—perhaps I should say distorted—by taking them out of BNFL and putting them into the LMA? I remind the Secretary of State that the start-up of that plant will instantly generate a huge amount of additional nuclear waste that will need to be dealt with in due course.

Who does the Secretary of State intend should bear the liabilities for any additional nuclear plants that are built in this country? Will those liabilities be translated straight to the LMA or will they form part of the economic and business cases of those schemes when they come forward for consideration? Our view is that the statement should have been made after the energy review was published. Does the Secretary of State accept that once again the true cost of the nuclear industry is being lost and disguised and that the statement undermines the fundamental energy review for which we are waiting?

Ms Hewitt: I regret the tone as well as the content of the hon. Gentleman's response to the statement. I shall stress again that BNFL is a publicly owned company. We are transferring what are existing public sector liabilities, which can never be anything other than public sector liabilities, from one part of the public sector to another part of the public sector in order that they can be more transparently, rigorously and effectively managed for all our benefits in the future. Those are historic liabilities, as I took some pains to explain. They arise from the early part of the civil and military nuclear defence industry.

By explaining to the House what has happened in the company in terms of the change in the valuation of those liabilities, and by proposing to transfer the liabilities and the corresponding assets to a separate Liabilities Management Authority, we will increase the transparency and accountability of the responsibility for those liabilities.

The operation of the Sellafield MOX plant was approved on its merits. The economic case was thoroughly assessed earlier in the year by independent consultants, who concluded that the plant's operation would have a clear and positive net present value, and that no additional risk would be imposed.

The hon. Gentleman also asked about future policy. That is an important matter, and it will be considered in the energy review.

Mr. Martin O'Neill (Ochil): I welcome the announcement by my right hon. Friend the Secretary of

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State. The fact that she has been able to make it today is due in no small measure to the work of the new management and staff over the past two years. It is now possible to assess properly the extent of the liabilities.

When the Select Committee on Trade and Industry, of which I am Chairman, tried to make some sense out of the books of the UKAEA and BNFL, we discovered that there had been severe operational problems and more than a suggestion of smoke and mirrors about the conduct of bookkeeping in the past. Neither company will have anywhere to hide now that the liabilities are to be placed under an appropriate authority. However, probably for the first time in their existence, both will now have a clear role and clear financial accountability.

In some respects, the LMA will be a shell operation, and the work will be performed by the same people who have performed it hitherto. Will my right hon. Friend assure the House that the LMA will not become another regulator in the industry? At present, as well as the local authority regulators, there are inspectorates covering the environment, health and safety and nuclear installations. All go about their business quite correctly, but it would be unfortunate if a layer of bureaucracy were to be laid on top of the activities of companies that are beginning to make their way in a positive sense. We must guard against that from the outset, so that the people who have done so well see today's announcement as a vote of confidence, and not as a question about their future capability.

Ms Hewitt: I warmly welcome my hon. Friend's remarks. We have been very grateful for the work that his Select Committee has done in the investigation of these matters. I also entirely agree with what he said about the enormous work done by the new management and staff to deal with the sorry situation that they inherited.

I agree, too, that the regulatory apparatus for the industry is complicated, but the need to ensure safety, security and environmental protection means that it has to be so. However, I assure my hon. Friend that the LMA will not be another regulator in addition to those that already exist, and neither will it be another layer of bureaucracy. It will be a customer for the effective management of nuclear liabilities.

Mr. Michael Jack (Fylde): I am sure that the BNFL workers in my constituency will welcome the Secretary of State's kind words about the quality of the work force, and that they will also welcome today's announcement.

Will the Secretary of State say a little more about who will determine the performance criteria and rules for the LMA? Will she also make it clear that income from the transferred assets will continue to be reinvested in the facilities necessary to carry on the work of disposing of waste nuclear material?

In addition, will she respond to the question posed by my hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale) about the incompatibility between the time scale of the inquiry by the Department for Environment, Food and Rural Affairs into the disposal of radioactive materials, and the pace at which the right hon. Lady understandably wishes the LMA to work?

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Finally, will the right hon. Lady say a little more about how the additional liabilities worth £1.9 billion identified by BNFL will be covered? Will that be the sole responsibility of BNFL?

Ms Hewitt: First, there is no conflict between the time scale for the consultation on nuclear waste management initiated by my right hon. Friend the Secretary of State for the Environment, Food and Rural Affairs, the energy review, and the work that we are setting in train to establish the Liabilities Management Authority. As I said earlier, there are no immediate proposals from any of the nuclear generators for new nuclear power stations. It therefore makes sense for the Government to consult on the appropriate measures to be taken in future for waste management arising from nuclear electricity generation. As I said in my statement, the responses to that consultation will help to inform the White Paper that we will publish next year on the LMA.

We will have more to say about the income of the assets that will be transferred and the establishment of performance indicators for the LMA, its accountability to Ministers, and thereby to Parliament, when we publish the White Paper.

Mr. Tam Dalyell (Linlithgow): May I strongly welcome the fact that the Government are grasping the nettle of civil nuclear liabilities? I also welcome their recognition of the clear difference between the UK's national legacy of nuclear waste arising from the early days of weapons and civil programmes in the 1940s, 1950s and 1960s and that from current operations. Is it not now clear that waste policy must reflect the fact that the knowledge to deal with such material already exists? Waste policy must make the distinction between the national legacy and the arisings from current operations. In fact, does not today's statement make it possible to have a proper economic assessment of the value to the economy and, indeed, the environment of the new nuclear stations at Sizewell, Hinkley and Hunterston, in which I, for one, passionately believe?

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