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28 Nov 2002 : Column 484—continued

Mr. Andrew Robathan (Blaby): What scale of fees is NOP charging for its involvement in the questionnaires, and will the Secretary of State refuse to pay those fees? Is he aware of the serious flaws in the questionnaires from the midlands and, I understand, from Wales? They talk about the number of flights currently going from the midlands to the south-east, but there are no flights scheduled from the midlands—or, I understand, from Wales—to the south-east. As a lawyer, does he consider that there might be grounds for judicial review or challenge if any decision is based on such a flawed questionnaire?

Mr. Darling: I was always taught never to give free legal advice, and I intend to stick to that. One can get struck off for it.

The questionnaires were issued because it was put to us that there were some people who, for whatever reason, did not want to write but wanted some way of expressing a view. Questionnaires can never be conclusive in themselves. The Government will look at

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them, because they are one way of gauging opinion, but we will also look at all the letters and representations, including those from Members of Parliament, before reaching a view. When we publish the White Paper there will certainly be an opportunity to debate it in the House. I expect that hon. Members will have many views—not, I suspect, along party lines—and those will help to inform our decision. Of course, there are other opportunities to raise these matters in the House well in advance of the White Paper.

Mr. Chris Pond (Gravesham): My right hon. Friend will know that this is the worst possible news for my constituents, and especially for the 3,000 who signed the Kent Messenger petition that I delivered to him yesterday. They will welcome his sense of urgency, but he will be aware that, in addition to the anxiety that this is causing, it is holding back many of the infrastructure developments and other plans in the Thames gateway, and in particular the north Kent end. Will he give whatever reassurance he can to both the public and the private partners in the Thames gateway developments that he will reach a decision and publish the White Paper as early as possible, as the uncertainty is really starting to cost us dear?

Mr. Darling: We will do whatever we can to resolve the uncertainty. It must have been within the contemplation of Kent county council that if it went to court it might win, and that if it won there would be consequences. It had a perfect right to do that, but we have to accept the fact that the court reached a particular view and get on with it as quickly as possible. Of course, if there are specific problems in north Kent, I—or my colleagues, who may be more directly involved in some of the matters that my hon. Friend has in mind—will certainly consider them.

Mr. John Randall (Uxbridge): The Secretary of State said that people can respond without having a public exhibition, but the majority want one, to try and find out the facts. I wrote to his Department some considerable time ago—I am still awaiting a reply, and perhaps my asking this question will help—about the perception that the process for Heathrow could have been done much better and more fairly. In the interests of fair play, therefore, would it be possible for the right hon. Gentleman to give a commitment to hold another exhibition for Heathrow? I know that the London borough of Hillingdon would be able and happy to facilitate that.

Mr. Darling: I shall reflect on that. The hon. Gentleman mentioned that he wrote and asked for a meeting. I asked my officials to provide me with a note of which colleagues had asked for a meeting with all Ministers in the Department, not just with me. The hon. Gentleman's name did not appear in that note, but I shall check again and find out what the position is.

Derek Conway (Old Bexley and Sidcup): The Secretary of State has adopted a very reasonable tone to the House, which is to be welcomed. Residents of Bexley and north Kent hope that he will be as strong an

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environmentalist as he is polite to the House. Will the right hon. Gentleman say whether the consultation documents will be reissued in the south-east of England only, or is he considering the whole package? If he is considering only the south-east of England, can something be done about the cost? The documents are very expensive, especially for residents' groups. Would the CD option be a possibility? Could some money be saved to allow more people to understand the impact of the vector flight paths?

Mr. Darling: I am not sure whether the hon. Gentleman was present earlier when I was asked a similar question. I made it clear then that the consultation will cover the whole country and not just the south-east. That is because the London airports are such an integral part of UK air transport as a whole. I am not planning to re-issue all the documents that have been issued already, but I am planning to issue a further document on the consequences of the Gatwick decision. There will, of course, be effects outside Gatwick, but the document is primarily on that decision. The new consultation period will run for four months from the publication of that document, and will allow people to make representations in respect of the entire country.

Mr. George Osborne (Tatton): I welcome the decision to extend the consultation across the whole country. Developments at Manchester airport such as a third runway or a fourth terminal would further blight the lives of people whom I represent. Picking up on the point made by my hon. Friend the Member for Windsor (Mr. Trend), may I urge the right hon. Gentleman to make a virtue of necessity and ensure that, when he makes a decision about where airport expansion will take place, that decision will be accompanied by a series of measures to protect people from excessive aircraft noise, pollution and the misery of night flights?

Mr. Darling: As I said earlier, the environmental impact of extending airport capacity will be taken into account. The consultation documents make that clear.

Mr. Jonathan Djanogly (Huntingdon): I welcome the extended consultation period, but the Secretary of State should understand that the vast majority of my constituents consider the consultation over the Alconbury proposal to have been inaccurate and unfair. The single public meeting that was held was moved from Peterborough to Huntingdon at only a few days' notice. Those who were able to attend found that the information was inaccurate, not least in that no night noise statistics were provided in relation to an airport that will have flights 24 hours a day. Will he undertake to hold a further public consultation meeting, at which more accurate information will be provided?

Mr. Darling: I suggest that the hon. Gentleman writes to me setting out his concerns on that matter. I shall then reflect on how best to deal with them.

Mr. Mark Francois (Rayleigh): May I remind the Secretary of State that the court case in question was supported by Essex county council on behalf of residents in the south of the county who would be adversely affected by the proposals on Cliffe, and on

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behalf of residents in the north of the county who would be adversely affected by the Stansted proposals? My special plea, on behalf of my constituents in Rayleigh and of people in surrounding constituencies, is that those in the south of Essex are allowed to play a fuller part in any expanded consultation period. In that way, they would be able to put across their worries about Cliffe. As has been noted already, there is considerable feeling in the south of Essex that, so far, people there have not been consulted properly on the implications of the proposals that may affect them.

Mr. Darling: As I have said several times this afternoon, there is nothing to prevent anyone living in any part of the country from making representations about any airport, whether it is nearby or distant. The Government want to encourage that. After all, the decision in the White Paper will have profound implications for air transport over the next 30 years. That is why it is important that we hear from people as much as possible. We have to reconcile people's concerns about airport development with the undeniable fact that more and more people are flying. Moreover, much of this country's prosperity depends on our ability to move people and goods about, nationally and internationally. There are decisions that we have to face up to, and we must take them next year. However, I appreciate that hon. Members want constituents to be well informed. If the hon. Gentleman has specific concerns, I suggest that he writes to me or to one of my ministerial colleagues. We will see what we can do to ensure that he has the information that he and his constituents need.

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British Energy

1.55 pm

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): With permission, Mr. Deputy Speaker, I wish to make a statement on British Energy.

British Energy operates eight nuclear power stations in the United Kingdom, supplies over a fifth of our electricity and employs 5,200 workers in Britain. In May this year the company announced in its preliminary results a pre-tax, pre-exceptionals, profit of £42 million in its British and north American operations, but an overall loss to its UK operations of £41 million. None the less, the company chose to maintain its dividend, paying out £48 million to shareholders.

During the summer, British Energy decided to attempt a bond issue in the United States, which was unsuccessful. On 13 August, one of the reactors at the company's Torness station was taken out of service due to unforeseen problems, reducing the company's income by £56 million. The next day company executives told investors that there were no immediate cash flow problems.

Throughout the summer, British Energy engaged in discussions with British Nuclear Fuels Limited to renegotiate the terms of its contracts. These were entirely commercial discussions between the two companies. At the beginning of September, British Energy realised that its financial problems were far greater than it had thought and that any conceivable deal with BNFL would not be enough to meet its requirements. On 4 September the company wrote to inform me of a significant worsening in the company's financial position and about liquidity problems. It said that the board would have to decide, on legal advice, whether it could continue to meet its liabilities and therefore trade legally, and it asked for Government help.

On the next day, I announced that the Government were entering into discussions with the company. On 9 September I announced a loan facility of £410 million to support its trading operations both in the UK and north America. On 26 September, after a further request from the company, the Government decided to extend the loan facility until 29 November and increase it to £650 million. That was designed to give the company sufficient time to clarify its full financial position and to come to a clear view on its future options.

Both the initial loan and its extension were notified to the European Commission under state aid rules, and I can tell the House that the Commission announced yesterday that it has approved the loan. I offered that loan because it was the best way of securing the safety of the nuclear power stations and the security of electricity supply to the grid and consumers. Those remain my overriding objectives.

British Energy has submitted a plan to the Government for the solvent restructuring of the company. We and our financial advisers have assessed its implications, and I can announce to the House that the Government have agreed to play their part in allowing the company to attempt solvent restructuring.

Both the company and my Department have made statements to the stock exchange today; I have placed copies of both in the Library of the House and in the Vote Office.

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The company has announced that it will continue to make payments to a fund that is used to pay for the costs of decommissioning its power stations, give the fund £275million of bonds in the company and surrender to the fund 65 per cent. of its available cash each year.

The Government will underwrite those arrangements to ensure safety and environmental protection. In addition, we have recognised that if this restructuring is to work, we must contribute significantly to the company's £2.1 billion of historic nuclear fuel liabilities that are managed by BNFL and extend to 2086. The cost to the Government will average £150 million to £200 million a year for the next 10 years and will fall thereafter.

If the company does very well, surpluses from British Energy's contribution to the decommissioning funds will help meet those costs. However, I also intend to look at how the contracts are managed as part of the creation of the liabilities management authority. In addition, BNFL is today announcing that it will agree new contracts with British Energy for fuel supply and for spent fuel services in respect of future nuclear electricity generation.

If the company's proposed restructuring is to succeed, first the existing creditors will have to accept both a temporary freeze on payments and subsequently a significant write-down in the value of what they are owed. Secondly, the company will have to complete the sale of all its north American operations. Thirdly, it will have to implement the new trading strategy that it announced today. Agreement to all that must be achieved by the middle of February.

The Government are prepared to continue to fund BE's operations while the restructuring plan is agreed and implemented. The existing credit facility will be extended to 9 March, with its size remaining unchanged at £650 million. Of that existing facility, £382 million had been drawn down by yesterday. Under the proposal, the money will be progressively repaid as the company's financial situation improves. In the event of administration, we have taken security to protect the interests of the taxpayer and rank above other creditors.

I also intend shortly to bring forward legislation to enable me to carry forward the Government's part of the proposed restructuring or, if it fails, to acquire the companies or their assets. This proposal for solvent restructuring will, of course, need state aid approval by the European Commission. Once the company has reached agreement with its financial creditors, we will notify the plan to the Commission.

In September, I said that, if possible, we would look to a solvent restructuring. However, we did not rule out the possibility that the company might decide to go into administration. We have therefore prepared detailed contingency plans for administration, in discussion with all the key responsible regulatory bodies, to ensure that whatever happens, nuclear safety and security of supply will be maintained.

I stress that if British Energy were to go into administration, all its nuclear liabilities would fall to the Government. We cannot walk away from them; no responsible Government could. That is why the situation with British Energy is different from that of any other generator.

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I take this opportunity to thank the staff at British Energy. Their skill and dedication is essential in ensuring nuclear safety. This has been an unsettling time for them, but whatever happens, nuclear power stations will continue to generate electricity and will continue to employ staff. Pension entitlements will be met. Trade suppliers will be paid. Customers' lights will stay on.

I understand that today's news will give little comfort to British Energy's financial stakeholders but they, too, must take their share of the pain if the company is to survive. The stakeholders now need to decide whether they are willing to support solvent restructuring; if they are not, the Government are fully prepared if British Energy decides that administration is the only option.

Today, the company announced that Robin Jeffrey is stepping down and that Adrian Montague will succeed him as chairman. Mr. Montague is an experienced executive who brings key business experience, from both the public and private sectors. It is clear that there have been management failings and it is right for the company to seek to strengthen its management team at this critical time.

I have set out the limits of what the Government are willing to do to support solvent restructuring. It is now up to the company, its new management and its financial stakeholders to determine the future of British Energy.

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