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27 Jan 2003 : Column 632—continued
7.39 pm
Mr. Simon Thomas (Ceredigion): In the light some of your earlier strictures, Madam Deputy Speaker, I have dismissed my meticulously prepared notes, which are next to me in piles on the Bench, and am left with a couple of sheets of paper. I wanted to contribute because since I came to the House I have followed with interest the debate about the future of energy policy. I throw up my hands in horror at the fact that, three years later, we still do not have an energy policy and are debating the issues out of context, which is why we are facing some difficulty in finding our way ahead.
One of the most startling statements in the debate was made by the Minister. It related not to the money that we are putting into British Energy in grants, loans or whatever, but to the White Paper, so I hope that you, Madam Deputy Speaker, will allow me to respond to his comments. He said that he could give an assurance that the White Paper would contain nothing to affect British Energy. That is an astonishing statement, although it may be necessary in the context of the Bill, shareholders and so on. However, it shows not only that the nuclear industry as it is currently constructed will not be affected by the White Paper, as hon. Members have pointed out, but that, because there is a liberalised energy market, the other players in it will not significantly be affected.
That means that we are still asking the same questions that were being asked a year ago in the performance and innovation unit report and that we are unlikely to get
any clear answers from the Government in their White Paper, apart from some fudging around the sides. There may be a little bit extra for renewables, combined heat and power or whatever else, but the basic construct of where energy in this country is going remains unchanged by the Bill and, in all likelihood, will remain unchanged by the White Paper. That shows that the Government have learned nothing from the fiasco that has occurred and the way in which the new electricity trading arrangements have worked in respect not only of British Energy, but renewables and CHP, even though they have not had the benefit of such a debate in the House or the introduction of their own measure.I do not approach the Bill from the perspective of believing in overnight shutdown of nuclear energy. I do not see on safety and economic grounds the case for any new build for nuclear energy, but I certainly agree that we cannot go for an overnight closure. We need a natural progression in the nuclear industry. As the reactors come to the end of their natural life, they should be decommissioned and we should face the costs. As we move along that path in the next 14 to 15 years, we must decide how to pay for that—an issue that the Bill partly addresses—and how we should put in place the security of supply that the Minister has adduced as one of the main reasons for introducing the Bill.
The hon. Member for Orpington (Mr. Horam), the Chairman of the Select Committee on Environmental Audit, of which I am a member, led the Committee to Germany last year, when we looked into the future of energy needs in this country. We saw a Government who had already decided to give up a nuclear programme. They have decided not to support new nuclear Bills and have said that, as nuclear power stations reach the end of their natural life, they will be replaced not by more nuclear stations, but by a mix of other energy sources. Security of supply is therefore a serious issue for the German Government, but they are prepared to bite that bullet and address the issue thoroughly and properly.
Mr. Hendrick: Does the hon. Gentleman not also remember that many hundreds of millions of pounds' worth of contracts to BNFL had to be honoured anyway? Effectively, the German Government chucked that money down the drain, as they still had to honour those contracts.
Mr. Thomas: I accept that, but it was a decision for the German Government. I do not know what the contracts were worth, but I do not think that it was much more than the £3 billion that the Bill gives to British Energy.
Brian White: The hon. Gentleman will be aware that there was a strong debate last year in Finland about whether nuclear power was right or wrong. It has now decided in favour of new nuclear build.
Mr. Thomas: I accept that. It is for sovereign states to take the decision. We are not discussing a European directive; such matters are part of how a liberalised energy market is run. My submission is that the failure of British Energy is significant in terms of what we should be regarding as the long-term interests of nuclear energy in this country. We can deal with the short term
in the Bill, but how should we deal with the long term? How should we deal with the fact that BNFL is also in a very dodgy financial position? That is a question that must be debated for the future.We have already debated how we reached the current position, so I shall not reiterate the details. The Minister said in his evidence to the Select Committee that what happened was as much a failure of British Energy's management as anything else, and I shall not disagree. Nor do I think that we can put the blame at the door of NETA, although I have some problems in that regard. There are some questions about how NETA has worked in a moral vacuum with no pressure of social or environmental responsibility from Ofgem, the regulator. The shareholders in British Energy benefited wonderfully when there was a pool arrangement and the base load of British Energy was rewarded in that context, so they should not complain when they find it difficult to cope with the liberalised energy market that they knew would be introduced. That is not a matter that we should address at a legislative level, which is one of the reasons why I am disappointed with the Bill.
The hon. Member for Reigate (Mr. Blunt) adequately demolished any significant arguments made on the grounds of security of supply. He made it clear that, if we did not take the Bill forward, we would not see the turning off of lights, as the hon. Member for Ochil (Mr. O'Neill) put it, in Scotland or anywhere else. There are processes in respect of companies such as British Energy that will ensure a continuation of supply and employment, so there is a way of addressing that issue.
The other argument that the Minister prayed in aid—it was mentioned by the hon. Member for South Cambridgeshire (Mr. Lansley)—was that the Bill kept British Energy going and maintained an income flow into the liability fund, which would be cheaper for the taxpayer. There are two questions about that. First, we have seen no independent report about the real value of the settlement to the taxpayer. Secondly, my feeling is that we will not see much money coming from British Energy into the public liabilities fund. When the Minister winds up the debate, as I think he will do—
Mr. Wilson: With the leave of the House.
Mr. Thomas: I shall not object to his doing so, and I hope that he will take the opportunity to tell us what sum he expects British Energy to contribute annually to the liabilities fund, bearing in mind that the Bill allows him to put £150 million to £200 million into the historic liabilities fund. I accept that those are different funds, but they come from the same pockets.
Decommissioning costs have also been mentioned. As I said in an intervention on the right hon. Member for Rother Valley (Mr. Barron), who is not currently in his place, we need a proper assessment of the real costs. We may face up-front costs now. That does not mean overnight decommissioning, but if we see that some nuclear closures are needed to allow British Energy to work in a competitive marketplace, we must ask how those costs can be met from the public purse. Ultimately, as the backstop is the public liability, the taxpayer will have to pay. I am not convinced that that is a more expensive option than the up-front payments
of about £1.15 billion for which the Government sought the European Commission's authorisation in the Bill and the ongoing £200 million a year that can be provided for at least 10 years, which amounts to at least £2 billion. It is with regard to that £3 billion package for British Energy that we must consider decommissioning costs. That is important not in the context of year one or even year five, as this is a 10-year Bill that provides the ability to give £3 billion to British Energy.I agree with some of the comments of Opposition Members about the idea that the Bill introduces a type of nationalisation. It is an attempt to establish the framework for potential renationalisation. I would not necessarily philosophically object to such a policy. I did not do so in respect of Railtrack and I am not sure that I would in respect of the nuclear industry, which would possibly be safer in public hands than it has been in private hands. However, the Bill is an expensive way of pursuing such an approach. Setting up a framework involving a private company but always thinking "We'll come in and renationalise" is not good value for the taxpayer.
In the long term, we could argue about whether nationalisation is good value for the taxpayer. My central argument about nuclear power is that it cannot be valued on the basis only of price per megawatt or kilowatt; it has to be valued on the basis of security supply and safety in particular. I am not completely comfortable with an industry that says "Let's drive down costs at all costs." We saw what happened with Sellafield and BNFL in that regard. I am more comfortable with an industry that involves a great deal of public interest, but the Bill is a missed opportunity in that regard.
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