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27 Jan 2003 : Column 610—continued
Mr. Lansley: I have detected no reference from the hon. Gentleman to British Energy's intention in the solvent restructuring deal to issue £700 million of new debt, £275 million of which would go into the liabilities fund. By extension, that is capitalisation for the operation and a contribution to meeting liabilities that would not be available in the event of either administration or nationalisation.
Dr. Cable: I thought that I acknowledged that when I said that the creditors would lose two thirds of their investment, which would happen if they took shares in return for bonds in those circumstances. I am happy to argue these points with the hon. Gentleman at greater length. There may be an element in the calculation that I have missed; but I do not think so.
David Hamilton: The hon. Gentleman mentioned the investors. As someone who does not gamble very often, I take the view that people who buy shares are gamblers; a loss as well as a profit can be made. I do not have much sympathy for anyone who buys shares—even an elderly person—and then cries about not making a profit. When we talk about discussing energy requirements, we should be talking about the cost to Britain and to the taxpayer.
Dr. Cable: I think that the hon. Gentleman makes two points. As regards the interests of investors, many of the shareholders are sophisticated investors and have no reason to complain about the loss that they will suffer. However, I do not gloat over that. After all, there are nuclear energy shares in our pension funds, so everybody loses. We have to accept that there is no shareholder value left, but I take no pride or joy in saying that.
The hon. Gentleman's second point leads me to the conclusion that I was about to draw: we need to consider the wider energy picture. There is obviously a link between this debate and the larger debate that we shall hold on the White Paper.
I was about to make a concession. Although many of the Government's arguments are weak, we need to think seriously about the carbon dioxide issue. I wholly accept that my approach would mean higher CO2 emissions, at least in the short term. I accept that that is part of the price we have to pay for a sensible and honest restructuring of the nuclear power industry. However, in taking that approach, I am in fairly good company: organisations such as Greenpeace and Friends of the Earth take the same view. Like me, they would argue that, whatever happens in the next two to four years, it is much more important that we are on the right
trajectory for the development of renewables, energy conservation and energy efficiency. It is important that all those elements are in place.If that overall approach were adopted, it would be possible to see a future in which we had less reliance on carbon emissions and nuclear power. However, the process will be difficult. I look forward to debating these matters again in the context of the White Paper.
6.12 pm
Dr. Stephen Ladyman (South Thanet): I am not entirely sure what I have heard from the Opposition spokesmen. The hon. Member for Twickenham (Dr. Cable), who spoke for the Liberal Democrats, was at least honest when he said that no shareholder value remained in British Energy, but the hon. Member for Reigate (Mr. Blunt) was less honest. The implication of his solution was that British Energy could be closed without tackling the problem of shareholder value.
If we adopted the hon. Gentleman's solution—thereby eradicating shareholder value—the Conservatives would be the first to say that as the Government had engineered a situation in which shareholders had lost all their money they should step in with compensation. Have we all forgotten the Conservatives' comments about Railtrack and the problems in the rail industry? If the hon. Gentleman really believes that British Energy can be put into the hands of administrators and continue to be run while maintaining shareholder value, he is setting out a bizarre contradiction.
Dr. Ladyman: As the hon. Gentleman is anxious to intervene, I am happy to allow him to explain himself.
Mr. Blunt: It is the hon. Gentleman's statements that are bizarre. I ask only that the market should operate. Of course shareholders will be bottom of the administrator's list. If any value remains, there will be a distribution to existing shareholders, but the taxpayer will have a prior charge—as indeed will the bond holders, the trade and other creditors, and possibly even Robin Jeffery with his settlement terms. If the Government intervene in the market, however, there will be a price to be paid.
Dr. Ladyman: The hon. Gentleman says that the market should operate, but the consequence of its operating as he suggests will be that no shareholder value will be left, and the Conservatives would shout the loudest that the Government had brought that about. Another consequence of his suggestion is that, ultimately, the operation of nuclear power would be run down—in that he finds common cause with the Liberal Democrats. There might be a debate about how quickly that rundown would take place. The hon. Member for Twickenham said that he knew of no one who had suggested that it should be shut down immediately, although that is exactly what Greenpeace proposes. However, at least he was honest enough to admit that the consequence of shutting down the nuclear power industry, if we do not agree to the Bill, would be an increase in carbon emissions. That would have a significant impact on our ability to meet our Kyoto
obligations and would certainly mean that we would contribute to greenhouse gas emissions for a long time to come.The hon. Member for Twickenham did not point out that the Government's figures show that between 12,000 and 24,000 people die prematurely each year as a result of carbon burning. If we do the maths, we realise that nuclear power, which currently generates a quarter of our electricity without burning carbon, saves between 2,000 and 4,000 lives in the United Kingdom each year. If we decide willy-nilly to adopt a proposal that would run down nuclear power and increase carbon emissions, we shall not only contribute to greenhouse gases but we shall also add to the number of people who die every year.
Mr. Hendrick: I agree with my hon. Friend's accurate comments about CO2 and about share prices. Does he agree that if the proposals of the hon. Member for Reigate (Mr. Blunt) were adopted and no financial assistance were given not only would British Energy collapse but thousands of jobs would be lost, including 2,000 at Springfields near Preston in my constituency?
Dr. Ladyman: My hon. Friend is right. To the best of my recollection, neither of the Opposition spokesmen mentioned jobs. Tens of thousands of people would lose their jobs if their solutions were followed, which seems utterly bizarre.
Mr. Andrew Stunell (Hazel Grove): The hon. Gentleman appears to have missed the central part of the contribution of my hon. Friend the Member for Twickenham (Dr. Cable): if nuclear capacity is taken out of the system, it will provide a platform on which other technologies can flourish. They will provide employment, but there will be a reduction in carbon dioxide emissions. The hon. Gentleman is doing some very special pleading on behalf of a dying industry.
Dr. Ladyman: The hon. Gentleman should be careful about what he says. The technologies whose cause he usually espouses in this place are based on renewable energy and are several times more expensive than nuclear power. Unless we distort the market there will be no future for those technologies. I challenge Members to provide the House with the name of any serious engineer or other expert who believes that the target of 20 per cent. production of renewable energy by 2020 is a practical possibility. Most of the experts do not even believe that the Government's target of 10 per cent. by 2010 is possible.
Even if we put all the resources of Government behind renewables, and even assuming that we maintain the renewables obligation that is part of the existing marketplace distortion, which we all seem perfectly happy to accept, no expert believes that 20 per cent. of our energy will be produced from renewables by 2020. To use wind power, for example, would require us to build 40 windmills every month between now and 2020. As my hon. Friend the Minister for Energy and Construction pointed out so eloquently in a previous debate on energy, that will not happen, especially in
areas of the country where the councils are under Liberal Democrat control. Every proposal for windmills is opposed on planning grounds in those areas.
Mr. O'Neill: A further point is that the wind does not blow all the time. We should thus require base load generation of some form—probably using gas or coal, the other two options for mass-produced energy.
Dr. Ladyman: My hon. Friend is absolutely right. Professor Laughton of the university of London has done the figures for us—if anyone cares to get hold of them and read them. He has shown that the prevailing winds are such that, in this country, the wind does not correspond with the demands for peak electricity consumption. We would have to spend £30 billion to £40 billion to build windmills all around the country to generate 20 per cent. of our electricity, and we would still have to match those windmills with onshore alternative energy supplies—almost certainly burning carbon—to guarantee continuity of supply. That would make an absolutely nonsensical energy policy. I put it to the House that the only energy policy that will make any sense for this country is one in which we have a balanced supply portfolio. That will require some carbon burning in the form of gas and clean coal.
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