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27 Jan 2003 : Column 648—continued
Dr. Cable: Is the hon. Gentleman aware that, of the £5 billion decommissioning costs, about £2 billion would be incurred after 135 years, and another £2 billion after 50 years? Clearly, those long-term commitments have to be factored in, but they hardly make any difference as to whether the plants are closed down in five years or in another 15 years at the end of their natural life.
Mr. Hendrick: Again, I beg to differ with the hon. Gentleman. Apart from the loss of jobs, there would be a loss of revenue and of electricity generated as a result of the plant ceasing to operate. From that point of view, it was interesting that one of the Welsh nationalist Members who spoke earlier referred to Germany. Germany took the worst option of all, which was to pay the cost of the contracts and close the industries, too.
Dr. Ladyman: Before my hon. Friend gets too bogged down with the Liberal Democrats, does he recollect that
the last time that we debated energy, they said that we should not build any nuclear power stations because we did not know how to decommission them? Today they tell us that we should not build any more because the ones we have should be decommissioned. The truth is that, as on so many issues, they do not know whether they are on foot or on horseback.
Mr. Hendrick: My hon. Friend makes a very good contribution.
Clause 1 provides for financial assistance in the short term and gives the option of acquiring the company or its assets if the solvent restructuring fails. The Government have stressed that this is an enabling Bill and that there is no agenda other than to try to restructure the company and get it up and running. I mentioned in an intervention a possible Railtrack-style solution, as John Edmonds, general secretary of the GMB, put it. I give the Government the benefit of the doubt with regard to this approach. There is still the possibility that more restructuring of the industry would not make it more profitable or self-sustaining than it is now.
There are two conflicting approaches to the provision of electricity in this or any other country. With a totally market-led approach, it stands to reason, because of the very different ways in which the energy is derived and then distributed, that not every method would potentially result in the same costs.
Similarly, if one believes in an energy policy that is diverse and draws from a number of sources, it is clear that some sources may be more profitable than others, and that therefore certain types of industry, as we have already seen from renewable industries, would need extra support in the form of derogations from the climate change levy or taxes to rebalance the market. The Government should enter into discussions with the European Commission to see how that matter can be examined, because a totally market-driven approach does not necessarily mean a fair market. It can be a distorted market, as my hon. Friend the Member for South Thanet (Dr. Ladyman) put it. In fossil fuel generation of electricity, there are associated costs that are not immediately paid for. In fact, the environmental costs of those industries probably compare with the environmental costs of the nuclear industry, if everything is taken into consideration.
Mark Tami: I completely agree with my hon. Friend. If matters are left totally to the open market, we shall not have a balance: we will not have nuclear or renewables but a short-term system based on gas turbines that will probably burn imported gas from unstable countries.
Mr. Hendrick: I absolutely agree. When the decision was made to allow gas to be used in generating stations I was one of those who thought that it was somewhat of a disaster, because gas is very precious. There should
have been a continued emphasis on coal, with new technologies to work with it alongside the generating capacity that was there—
Mr. Deputy Speaker (Sir Michael Lord): Order. The hon. Gentleman is again straying from the main subject of today's debate.
Mr. Hendrick: I apologise, Mr. Deputy Speaker. It is just that, in determining the true costs of nuclear power, to determine whether a nuclear power industry is viable, to some extent we need to look at the alternatives, because obviously there are implications. But I will not stray any further in that direction.
Britain's nuclear power industry has developed from a programme that originally had military imperatives into one with political imperatives, leaving us with what is, by its very nature, an expensive means of producing electrical energy. During the debate in the 1980s, cost per kilowatt-hour in comparisons between coal and nuclear power was based purely on the operating costs of each means of generating electricity. I put it to the Minister that £16 per megawatt-hour, which is the lowest cost of production nowadays, is probably not the real cost, for the reasons that I mentioned earlier. Research and development costs for nuclear facilities and waste management and disposal were never factored into the equation for operating costs because the industry was Government-owned and not subject to market scrutiny.
As other Members have said, the privatisation in 1996 was a give-away, and it should never have taken place because the industry was never going to meet, and beat, the competition from gas. British Energy, like Railtrack, has put shareholders before consumers. Last May, it had a 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 nearly £50 million to its shareholders. Last year, when the company had already recorded large losses of over £500 million, the chief executive was awarded a performance bonus, and is now being offered a fortune. Given the dividend, which was clearly a bribe to keep the chief executive in his job, and his bonus, it seems that the company is paying itself for under-performance.
Despite that, it is essential that BE continue to produce electricity and that this country develop a viable nuclear power programme to meet our international obligations on climate change. The switch-off of all eight stations would cost more than letting them continue to run. They need upgrading, and, in time, the Government will need to consider new build. Safe nuclear power is the future, and it must be part of an overall balanced energy policy with a mix of sources.
While the single European market in energy continues to develop, it is plain that a purely market-driven energy policy will not respect the environment, just as the coal-generating industry failed to respect it before scrubbing technologies were introduced. The Government should work with the European Commission to consider how nuclear generation industries throughout Europe can be assisted in coming years. Wind and waves are okay, but they will never produce 20 per cent. of this country's electricity, and they would do well to reach 10 per cent.
The nuclear industry has the capacity, and it is an essential part of this country's electricity generation programme.8.53 pm
Mr. Russell Brown (Dumfries): I am pleased to be able to contribute to the Second Reading of this enabling Bill. My hon. Friend the Member for West Bromwich, East (Mr. Watson) said that he thought the Chamber was full of exiles from the Standing Committee on the Communications Bill, so I take it that there are difficulties in that Committee. I suggest that tomorrow he pop along to Room 14, where the Hunting Bill will be discussed, and then he will see real difficulties.
The Bill focuses on the current problems for British Energy. Hon. Members on both sides of the House have made a variety of observations, but a common thread that runs through the debate is that the decisions of the company's management have greatly contributed to its downfall. We have heard about the spent field contracts with BNFL. Signing contracts has done nothing to assist with the difficulties; in fact it has contributed significantly to the problems.
The Bill will ensure that the Government are prepared for the successful restructuring of the company or its administration. I would sincerely like to think that it will be the former. Administration is not my preference. It would be a major mistake. However, we need to make contingency plans for it, otherwise people will highlight it at each and every opportunity.
Some colleagues I spoke to recently think that the Bill is a form of renationalisation, which in some people's minds is a good idea. However, even those on the extreme left wing of the Labour party would shy away from renationalising the nuclear industry, because the two do not tie together. I do not want to stray beyond the terms of the Bill. The energy debate has been touched on in a variety of forms, but it is for another day.
The energy White Paper will be important in determining how the Government deal with the country's future needs. Some 11 days ago, I received a written response from the Minister to an oral question in which I asked about the energy White Paper. He gave the succinct answer that it would be published shortly. Today, he said that that might be published in February or March. Let me give my hon. Friend some advice. Some hon. Members greatly admire and love nuclear energy, so perhaps Valentine's day would be a good time to publish the White Paper. Others are not so keen, however. He has heard the arguments before, and perhaps he should beware the Ides of March. Whatever he decides, many of us look forward to the White Paper being published soon.
The priorities of nuclear safety and security of supply must be met. The Bill will enable those to be determined in Committee and beyond. Security of supply has always been a feature of the energy debate. There is a wide variety of views on how it can best be achieved. The hon. Member for Ceredigion (Mr. Thomas) said that the 22 per cent. overcapacity could be dealt with by the closure of nuclear power stations, but that would create in the sector a fine balance that I would not be prepared to risk. He said that nuclear contributes to some 20 to 25 per cent. of power generation in the UK. I would not
argue with that. My hon. Friend the Member for East Lothian (Anne Picking) rightly said that it is double in Scotland, at about 50 per cent.
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