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6 Feb 2003 : Column 474—continued

2.30 pm

The White Paper will be published shortly—in the spring, or at the end of February or the beginning of March—and one of the things that many Members wish to know is the consequent cost of that in relation to the White Paper. My hon. Friend the Minister, who has been very good to me over many years, will know of my long-standing interest in other sources of energy, particularly coal. Is the £60 million that has been set aside for the coal industry investment aid scheme starting this year still available, or has it been cleared out to give to British Energy?

Mr. Crispin Blunt (Reigate): It is a pleasure to follow the hon. Member for Sherwood (Paddy Tipping), whose expertise in energy matters is known to all hon. Members. I am grateful to the hon. Member for Twickenham (Dr. Cable) for setting out the broader picture so well. I do not intend to repeat that exercise but simply to pick up one or two points that he made.

First, it might be helpful if the Minister were to let us know whether there is any new formulation in relation to when the White Paper is due. According to the last one, it is due at the end of February or the beginning of March. If things have moved on since—it has been more than 10 days—it would be useful to know.

The Minister for Energy and Construction (Mr. Brian Wilson): Before the summer.

Mr. Blunt: I am now tempted to ask which months make up summer, but I might trespass on your patience, Sir Alan, if I pursue that line.

The hon. Member for Twickenham rightly drew attention to the fact that this whole debate is now about the amount of assistance that the Government will give British Energy, behind which sits the whole question of state aids and the European Union. Even if the Government are successful in putting together the rescue package with British Energy, it is highly likely that when we arrive at the summer of 2004, the competition commissioners will, properly, unpick the whole thing.

There cannot be a case for giving an unlimited amount of money to one company in the electricity sector, particularly when the rest of that sector is under such enormous pressure. I am certain that at least one company will pursue the matter vigorously, along with

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environmental groups, with the competition authorities. That is why the question of whether this Bill is necessary at all remains.

The hon. Member for Twickenham made it clear—repeating what is now accepted across the House—that the plants will continue to generate power, whatever condition they end up in: administration as an independent private company; a private company with the Government rescue arrangement; or owned by the Government. No one disputes that they will continue to generate power, and, on my understanding of their financial situation, they will continue to generate cash because the costs will now have been discounted and most of their liabilities, of one form or another, will have been taken on by the Government under whatever arrangement we reach.

I take issue only with the hon. Gentleman's suggestion that even the Conservatives were now interested in how much money was going to be put into the company. I cede to no one in the House the defence of the taxpayer's interests—the Conservative party has a proud record of doing that. A decade ago, the situation for nuclear energy was slightly different. I am sorry that the hon. Member for Bolsover (Mr. Skinner) is not in his place, as the unfortunate leadership under which the National Union of Mineworkers found itself labouring had much to do with creating the environment of the late 1980s in which the vigorous support for nuclear energy perhaps went beyond the economic case.

I have tabled new clause 1 and amendments Nos. 4 and 5. New clause 1, which is similar to and has the same design as amendments Nos. 10 and 11 tabled by the hon. Member for Twickenham, would limit the liabilities assumed by the Government to the historic liabilities. We have tabled a figure of £2.1 billion, which is the figure for the back-end fuel costs in the April report and accounts for the company, to which the taxpayer's exposure would be limited.

Amendment No. 12 was tabled by the hon. Member for Twickenham and deletes the provision for assistance to the company. Will the Minister explain whether such legislation is absolutely necessary to assist the company were it to go into administration? I do not believe that it is necessary, but I would be grateful for the Government's view.

Amendments Nos. 4 and 5 are designed to tighten up the ways in which the Government can give financial assistance to British Energy by removing the phrase, "by any other means", which seems to be drafted widely. Plainly, the drafting covers any way in which the Government could give money to British Energy. Some perfectly proper ways exist in which they can assist British Energy without having to resort to "by any other means". One is to ensure that if we have something that can properly be called a climate change levy, it is not paid by nuclear generated electricity. Equally, its business rates could be assessed on the same basis as those of any other power generating company rather than under the arrangement introduced in a statutory instrument passed in 2000. We are looking for answers to those questions. Why should the provision on the Government's form of support be drafted so widely?

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Why cannot the liabilities be limited to the historic liabilities at 4 September 2002 or to £2.1 billion, which is our formulation?

Finally, I want to address the point raised by the hon. Member for South Thanet (Dr. Ladyman) in an intervention on the hon. Member for Twickenham: that the only case for the Government to rescue British Energy in the interests of the taxpayer is that the company may be able to trade out of its current position. The Government would therefore get a return on their investment in rescuing British Energy. Of course, the assets of British Energy—the power plants—have a value in the market. If the Government take a title to the liabilities, they will have first charge, should the company go into administration, over the money that would be raised from the sale of those assets. Will the hon. Gentleman reflect—I know that he is a supporter of nuclear energy—on what will be the future of the nuclear generating industry in this country if it has to be rescued in this way by the Government or if it ends up in public ownership? I think that that would be its death knell.

Mr. John Bercow (Buckingham): Will my hon. Friend tell the Committee whether, in seeking to cap the cost to public funds of meeting those liabilities, and thereby exercising his and the Opposition's fiduciary responsibility to the taxpayer, he is purely motivated by intellectual considerations or is properly responding to representations from other hard-pressed power suppliers?

Mr. Blunt: There have been representations from the renewable energy sector in particular—Ecotricity is one company that springs to mind. I hope that my arguments are also sustained by intellectual credibility. The rest of the electricity industry has ducked below the parapet somewhat, and there seems to be a certain shamefacedness about the consequences of emerging into the open to challenge the Government on this rescue strategy. I think that the industry is waiting to see, perhaps hoping that it might not come to this after all and that the Government will not end up taking such a position in the electricity market and so disrupting it for other electricity generators.

One or two companies made some noises in September when the loan was first made, but they have gone rather quiet since then. It would be helpful to all of us in illuminating the debate as time goes on, not just this afternoon, if the Electricity Association and the individual companies were prepared to be rather more clear about exactly what their position was.

Mr. David Chaytor (Bury, North): I want to speak specifically about my amendment No. 26, but first I wish to say that I was very sorry not to be here for Second Reading. However, I did read the text of much of that debate in Hansard, and it occurred to me that, on this difficult and complex problem confronting the Government, those who argued for the Bill did not divide into either supporters or opponents of nuclear energy. There was an enormous ambiguity in the Government's solution, and so it attracted supporters from both sides. Some opponents of the further development of nuclear power were happy to support the Bill on Second Reading precisely because they

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thought that it would hasten the end of nuclear power, and the supporters of nuclear power were happy to support it precisely because they thought that it was the only way to ensure a continued future for nuclear power.

That ambiguity is also present with regard to the amendment, which argues that, under any future financial arrangements whereby the Government put public funds into British Energy, those funds should not be deployed to sustain the reprocessing of spent nuclear fuel. Both the opponents and proponents of nuclear energy should support the amendment.

The traditional environmental lobby, in which I broadly include myself, feels that the days of nuclear power are numbered and that, whatever happens to our overall energy mix, nuclear will play a significantly smaller role until or unless we finally discover the secrets of nuclear fusion. We must always ensure that that possibility remains open.

For those of us who are broadly opposed to the further development of nuclear power in its current form, the question of the reprocessing of spent fuel is hugely important, because reprocessing is enormously expensive. We all know the complaints that British Energy made, I think two years ago, about the excessive amount it had to pay to British Nuclear Fuels Ltd. for reprocessing spent fuel and the savings that it thought that it could make if it could store its spent fuel.

The economic arguments against reprocessing are extremely strong. It follows, therefore, that those who want a future for nuclear power should understand that its likelihood is strengthened if reprocessing spent fuel is taken out of the equation. The cost to any future British Energy, whether publicly owned or restructured solvently, of storing its fuel would be significantly less than that of reprocessing. As I recall the figures, the savings could be £100 million to £200 million per annum for the next 10 years—a not insignificant amount.

I understand that there have been discussions between BNFL and British Energy. I recall from the Library briefing on the Bill that my hon. Friend the Minister had said as late as December that those discussions had not been concluded, and that there was no agreement about what the future basis for reprocessing contracts might be. It would be very helpful if in his reply my hon. Friend could tell us the latest information on the renegotiation of contracts.

Whatever the economics, and whatever the price of reprocessing spent fuel, it is important to understand—

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