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27 Jan 2003 : Column 593—continued
Mr. Blunt: I am grateful to the Minister for that clarification. What he has said is that the deal that BNFL is offering British Energy today is exactly the same deal as it offered British Energy in the run-up to 9 September. I am grateful that he appears to indicate assent. I think that that is what he has said. If it is not the case—and I have no doubt that the Select Committee of the hon. Member for Ochil will look further into this matter—then, of course, the event that put British Energy into the arms of the Government was the failure of the negotiations with BNFL. I accept that there were a vast number of other issues in play as well, but that was what drove it into the arms of the Government to seek a loan. The Minister is on record as having said that; it is not a point in dispute. It is agreed that the failure of those negotiations with BNFL was the point at which British Energy had to seek assistance from the Government. I hope that the Minister will make it clear whether he is saying that the deal in the rescue package and proposal put forward to British Energy with BNFL is identical to the one that was being negotiated on 9 September. That is the crucial issue.
Mr. Wilson: I want to be clear about what the hon. Gentleman has said. He used a slightly pejorative phase, saying that BNFL drove British Energy into the arms of the Government. Is he saying, on behalf of the Tory party, that BNFL had an obligation to offer British Energy a deal which would have prevented it from going into the arms of the Government, irrespective of the impact that that would have had on BNFL and, indeed, the taxpayer? If so, that is a remarkable proposition.
Mr. Blunt: The Minister said that BNFL is offering British Energy precisely the same deal as before, and I just want him to tell the House that that is correct. If so, the issue does not arise. But if BNFL, as a Government-owned company, has now offered a different deal as part of the rescue package that the Government are presenting to the House in association with the Bill, that is quite a different question.
Mr. O'Neill: This point is not one of party dispute but of knowledge or interpretation of the facts. As I understand it, and it may benefit the House if the hon.
Gentleman confirms that this is his understanding, in September we became increasingly aware of the difficulties that British Energy was having. It made several calls on BNFL, and on each occasion it upped the request for a cut in prices. When it came to what most people would have regarded as BNFL's final offer, British Energy said, "We are sorry, but we need even more." At that point BNFL said, "If we offered more, we would be putting ourselves into a difficult financial position and we would be in the arms of the Government." As I understand it—
Mr. Deputy Speaker : Order. I understand that this is an important point and obviously the House is anxious to have it cleared up, but the hon. Gentleman will be seeking to catch my eye later.
Mr. Blunt: BNFL is already in the Government's hands, and that is the point. I, like anyone else who is not on the Government Benches, have not been privy to the negotiations between BNFL and British Energy. The issue is whether the proposed contract between them is materially different from the one that drove British Energy on to the rocks—it was the final wave that washed it ashore—because the Government are the owner of BNFL and can influence its decisions, which have wider ramifications for the taxpayer.
Paddy Tipping: Will the hon. Gentleman give way?
Mr. Blunt: Will the hon. Gentleman let me make a little progress before I give way?
The Government's rationale for their actions is accompanied by the constant refrain, which was repeated by the Minister this afternoon, that they are acting to secure the electricity supply of the United Kingdom and to ensure its safety. They have said that so often that it is even possible that they have convinced themselves that it is true—a Goebbels-like quality of self-delusion. Any examination of the issues of safety and of security of supply shows those explanations to be nonsense, but of course we heard them again this afternoon and they sound good. One should never underestimate the attraction of what sounds good for this glib and superficial Government.
British Energy has demolished the Government's explanation. In response to the legal challenge by Greenpeace and Ecotricity that the aid was unlawful, both British Energy and the Government entered a defence, and they contradicted each other. The Government said:
- "The grant of the loan to British Energy was not unlawful given that it had to be granted as a matter of urgent necessity in the face of unacceptable risks to public safety and security of supply."
- "The claim herein for judicial review is wholly misconceived since it depends on a false hidden premise which the Claim Form does not even seek to substantiate.
The premise is that, if the S of S had not extended the Financial Assistance to BE, then the amount of electricity generated by the nuclear generating stations presently in BE's ownership would have been materially reduced and that, if the relief sought herein were granted, the amount of such electricity would be materially reduced, even perhaps through cessation of generation as a result of permanent closure of the stations. That premise is demonstrably false, irrespective of the person or persons in whose
- ownership and under whose control the stations are operated; and this is true not only of BE's eight nuclear generating stations but also of its non-nuclear station at Eggborough, the output from which is used to enable the output from the nuclear stations to be more profitably marketed. While the Claimants' Additional Material for Claim Form is profuse in its citation of abstract legal propositions, the Claimants appear never to have addressed their minds to the practical application of those propositions to the actual and unusual circumstances of the present case concerning, as it does, nuclear electricity generating facilities".
There is a final nail in the coffin of the security of supply argument. We could switch off all British Energy's contribution to the grid and, on current figures, it could still supply the market on the coldest day of the year. The Minister made it clear that the margin might be a little tight, but there would still be a margin, provided by a combination of power supply through the interconnector to France, demand management and the 10 per cent. margin available by lowering voltage at peak demand. Prices would also rise, but supply would continue. As has been made clear, however, there was never a prospect of Britain being in that dramatic position. The Secretary of State even contributed to rubbishing her own explanation by saying in her statement:
- "but whatever happens, nuclear power stations will continue to generate electricity and will continue to employ staff."
Let us consider the safety case. Is anyone suggesting that plants would be abandoned by their staff? Is the Minister suggesting that his constituents would walk away from Hunterston or that the on-site arrangements for nuclear installation inspection would suddenly come to an end? No, of course not. The fact that a board of directors in East Kilbride is replaced by an administrator makes no practical difference to the running of any asset. Heysham 2 and Sizewell B are not going to leak or explode because there has been a change of personality in charge of the finances.
Paddy Tipping: Does the hon. Gentleman absolve the board of British Energy from all blame? Did it not spend £500 million on Eggborough? Did it not sell SWALEC when other people were concentrating on the consumer? Did it not pay SWALEC many thousands of pounds in special dividends? Should it not, too, be criticised?
Mr. Blunt: Quite. I could not agree more. The commercial strategy of British Energy has been sadly
flawed. The hon. Gentleman mentions SWALEC. British Energy purchased SWALEC for £100 million and sold it for £200 million. On the face of it that might appear a satisfactory arrangement. We need to draw attention to the fact, however, that it bought SWALEC with an obligation to buy power at a highly inflated price from another generator, which appears in its accounts as an onerous contract with a liability of £200 million. The board of British Energy has made numerous mistakes. Indeed, I could go on citing them, but I do not want to make this debate an examination of why British Energy is responsible for its predicament. [Interruption.] I have never said that it was not responsible, but the Government are also responsible and it is my job to hold them to account. It is not my job to hold the board of British Energy to account. I am not a shareholder or bondholder in British Energy. The Government are inviting the taxpayer to take on an unlimited liability and the House to give them unlimited freedom of action in the Bill.
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