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15 Oct 2002 : Column 666Wcontinued
Mr. Yeo: To ask the Secretary of State for Trade and Industry what (a) meetings and (b) discussions between her Department and third parties have taken place at which the future of members of the board of British Energy has been discussed. 
Ms Hewitt: On 9 September 2002 the Government agreed to provide British Energy with a loan for up to #410 million in respect of its working capital requirements and cash collateral for trading in the UK and North America. This short-term loan was put in place until 27 September. On the 26 September the Government agreed to extend the loan until 29 November and increase it from #410 million to up to #650 million as well as taking security for the loan over British Energy's assets.
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Ms Hewitt: The Executive Chairman of British Energy, Robin Jeffrey, wrote to me on 4 September to inform me that the company's position was so critical that it had to consider whether or not it could continue to meet its obligations as they fell due. The possibility of a statement was raised in that letter. My officials met with the company on 4 and 5 September; the company decided to make a statement to the Stock Exchange at its Board meeting shortly after the meetings with my officials. My Department was made aware of the terms of the statement shortly before it was announced.
Ms Hewitt: On 4 September, Robin Jeffrey, the Chairman of BE informed me that the company was considering whether or not it could continue to meet its obligations and sought to initiate discussions over possible funding. On 5 September BE announced that it had initiated discussions with the Government about possible immediate financial support and to enable a longer term restructuring to take place. My Department issued a separate statement on that day confirming that these discussions had started. BE's statement also said that if discussions over financial support were not successful
Having regard to nuclear safety and security of supply, I decided with the agreement of the Treasury to provide BE on 9 September with a loan of up to #410 million in respect of its working capital requirements and cash collateral for trading in the UK and North America. This was a short-term loan, for the period until 27 September pending clarification of the company's financial position. No commitment was given about support beyond that period.
During that initial period it became clear that it would not be possible to have a full understanding in detail of the company's position in a way that would enable choices to be made about future restructuring options. Following discussions with the company and its advisers, and in agreement with the Treasury, on 26 September I announced an extension to the loan, now increased in value up to a maximum of #650 million. The loan has been extended until 29 November in order to give sufficient time to clarify the company's full financial position and to come to a clear view on the future options for the company.
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In agreeing and extending the loan I have sought to build in the greatest safeguards to the taxpayer. The loan is cross-guaranteed by the BE group as a whole, and is backed by security given by BE plc and its principal subsidiaries. In administering the loan we have set out strict criteria and operational arrangements which are being managed by our accountancy advisers, Deloitte and Touche.
In view of the urgency in this case, we have sought and obtained from HM Treasury a Contingencies Fund advance of #500 million to finance the loan, and subsequently a further advance of #150 million to fund the extension of the support. It is my intention to seek Parliamentary approval for the loan through a Winter Supplementary Estimate in order to provide the authority for this loan and hence repay the Contingencies Fund. It was not possible to give the House advance warning of the need to use the Contingencies Fund. The case was urgent and I judged it would clearly be contrary to the public interest to delay expenditure until Parliamentary approval to the Supplementary Estimate could be given, in view of the risks that immediate and sudden insolvency posed to nuclear safety and security of supply. The urgent need for the loan and extension were, however, communicated to the Chairman of the Public Accounts Committee.
These arrangements have been given in compliance with the European Commission rules on Rescue and Restructuring aid and have been notified to the European Commission as rescue aid. EU State Aid rules normally require that within a period of 6 months from the authorisation of rescue aid that aid is either repaid or a restructuring plan is submitted to the Commission. We have indicated to the Commission that we intend to comply with these conditions.
At this stage, no decisions have been taken on the future of BE and no commitments given. But whatever the outcome at the end of this period the Government will continue to act to achieve its objectives of nuclear safety, security of supply while protecting the interests of the taxpayer. I recognise the key ongoing role played by employees and suppliers who are providing goods and services essential to the safe management of the UK nuclear power stations.
Ms Hewitt: Earlier this year, British Energy gave my Department information on some aspects of its financial position. The Executive Chairman, Robin Jeffrey wrote to me on 4 September to inform me that the company's position was now so critical that it had to consider whether or not it could continue to meet its obligations as they fell due.
Mr. Yeo: To ask the Secretary of State for Trade and Industry if she will make a statement on the income received by British Nuclear Fuels Limited from its reprocessing contract with British Energy. 
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Mr. Yeo: To ask the Secretary of State for Trade and Industry if it is her Department's policy to seek to require any successor body to British Energy to enter into a contract for reprocessing waste with British Nuclear Fuels Limited. 
Mr. Yeo: To ask the Secretary of State for Trade and Industry what (a) meetings and (b) discussions between her Department and British Energy have taken place in which (i) the relationship between British Energy and British Nuclear Fuels Limited and (ii) the Climate Change Levy were raised. 
Mr. Yeo: To ask the Secretary of State for Trade and Industry if she will make a statement on the impact on the Government's (a) expenditure and (b) liabilities in the event of British Energy being placed in administration. 
Ms Hewitt: The Government has provided British Energy with a loan facility of up to #650 million until 29 November. The impact on expenditure and liabilities in the event of British Energy being placed in administration would depend upon the circumstances at the time. No decisions have been taken and no commitments given on British Energy's long term future at this time.
Mr. Yeo: To ask the Secretary of State for Trade and Industry what reports her Department has received from the Financial Services Authority into British Energy; and if she will place a copy of such reports in the Library. 
Mr. Yeo: To ask the Secretary of State for Trade and Industry what (a) meetings and (b) discussions have taken place between her Department and shareholders in British Energy at which British Energy has been discussed. 
Mr. Yeo: To ask the Secretary of State for Trade and Industry if she will make a statement on the impact on the Government's policy of managing the nuclear legacy of British Energy being placed into administration. 
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Mr. Yeo: To ask the Secretary of State for Trade and Industry if she will list the (a) banks and (b) other companies in the financial sector with which her Department has had discussions about British Energy in the last 12 months. 
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