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6 Feb 2003 : Column 477—continued

Mr. Martin O'Neill (Ochil): Has my hon. Friend made any calculation of the cost of discontinuing reprocessing in the light of the expenditure that has already been made for the plant? How much would it cost to mothball or dismantle it? How much would it cost BNFL if these contracts, which have already been signed and which one would imagine are still in force, had to be written of?

2.45 pm

Mr. Chaytor: I have not made such calculations, but others have. Now that British Energy is no longer a private sector company, and may not continue as a private sector company, the whole question of the space within the Government accounts where the cost of

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reprocessing appears is quite different. This is a strong argument for ending reprocessing, because the Government now, both as the sole shareholder of BNFL and in their role in controlling the future of British Energy, are in a stronger position to determine what the future will be.

Certainly, in terms of the comparative costs of reprocessing as against the storage of spent fuel, there is no dispute: storage is significantly cheaper. That is why in nuclear power stations across the world, 85 per cent. of spent fuel is stored and not reprocessed. That is why the United States decided in 1977 to end reprocessing. The economics are clear, and they impinge directly on the future liabilities of the British taxpayer, which lie at the heart of this group of amendments.

I should like to speak briefly about the reason for our historic commitment to reprocessing and how the conditions in which the reprocessing decision was taken no longer apply. Forty years ago, the prime purpose of developing nuclear energy was to generate plutonium to build up our stockpiles of weapons during the early years of the cold war. The decision to reprocess was taken when uranium was considered to be in short supply, or to be a fuel that would become so expensive that we needed alternatives. Those days have gone. Uranium is still there and is comparatively cheap.

When the decision was taken, there was no serious debate about the technologies of storage. In the early years of nuclear energy, some fuel had been stored. In fact, some fuel from the Magnox reactors was stored and continued to be dry-stored at the Wylfa reactor. My argument is that the decision to develop a reprocessing industry in Britain many years ago was arbitrary. It could have gone differently. It was based on circumstances that no longer apply and has not been followed by most countries that have a nuclear power industry. We have trapped ourselves into that historic mistake.

The collapse of British Energy, as with so many crises, gives an opportunity to re-evaluate the fundamental assumptions that have determined our thinking for many years. There must be such a re-evaluation. The amendment's purpose is to argue that now, whatever people's views about the total amount of public money that should go into the rescue of British Energy, there can be no dispute that none of it should go into carrying on the reprocessing of spent fuel. Discontinuing it would be cheaper for the taxpayer and for whatever the future form of British Energy may be. It would also be safer in terms of the environment and certainly in terms of the current international problems with proliferation. I cannot be the only Member who sees a contradiction between our view of what is happening in North Korea with the starting up of nuclear plant to generate plutonium, and the fact that that is exactly what we have been doing for the past 40 years.

Mr. John Horam (Orpington): I want to make a point that I have made in similar debates, although without any success. A Treasury Minister should be present because we are talking about substantial sums of public money. The hon. Member for Twickenham (Dr. Cable), who fluently and ably moved the amendment, tried to remedy that by proposing that he should don the cap of the Chancellor of the Exchequer. I think Lloyd George

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was the last Liberal Chancellor, so there is a distinguished lineage. However, he is not likely to be Chancellor and his brave effort, sadly, failed.

No doubt the Minister would not entirely welcome the presence of a Treasury Minister. There will have been sensible arguments between the Department of Trade and Industry, the Minister and the Treasury. We are entering a period in which the Government's finances look distinctly rocky and the Bill paves the way for a further payment. In addition to the £5 billion or so that we may spend on a war in Iraq, which we heard about earlier, there are other considerable outlays that could not have been foreseen when the Department's budget was originally suggested. The House must take its role as the guardian of taxpayers' money seriously, as my hon. Friend the Member for Reigate (Mr. Blunt) said.

The hon. Member for Sherwood (Paddy Tipping) asked whether the deal has cleaned out the Department's energy budget. Presumably, like every other Department, the DTI drew up its public service agreement with the Treasury some time ago under the spending agreements, to which the Chancellor attaches great importance, and there was a provision for energy. Does the scheme clear out the budget or will there be a drawing down from a separate contingency fund? I shall be interested to hear what the Minister says about that.

It would also be useful to have a Treasury Minister present because, as the hon. Member for Bury, North (Mr. Chaytor) said, we have an opportunity to re-evaluate the differing roles of energy suppliers in the total picture. We know that because the Minister is producing a White Paper, perhaps in the early summer, and the whole energy debate is at a critical point. In many ways, it is a great pity that British Energy has reached its present pass before the Government's views on how the picture may evolve have been made public. There will be differing expenditure consequences as a result of the, hopefully different, choices that the Government may make while they deliberate on the White Paper. I, too, want greater support for renewable energy. That will cost the Government quite a bit, at least in the initial stages. I do not think that renewable energy can solve the whole problem, but it can make a contribution, so I hope that the Government give it extra support.

For all those reasons, I should have liked a more comprehensive assessment of the financial consequences of the measure set against the background of the energy debate and deteriorating public finances generally.

Mr. Weir: I support the case made by the hon. Member for Twickenham (Dr. Cable) and will support his amendments if he presses them. He made cogent points about the financial aspects of British Energy and there is confusion about the Government's strategy for it. It is unfortunate that the White Paper has not been published.

The hon. Member for Bury, North (Mr. Chaytor) made a good point about the difficulties faced by both pro- and anti-nuclear energy interests. Had the money for British Energy been linked to a run-down and decommissioning of plants, many of us would have

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enthusiastically supported the plan, but that is not the case. What is the strategy for British Energy? Is it linked to building new nuclear power plants? Is that why the Government wish to keep it in the private sector and keep it going as a non-state company, because we would oppose that?

It has been stated that nuclear plants cannot be shut down overnight. We all accept that. The policy pursued by the Scottish National party is that all nuclear plants should be shut down at the end of their economic or technological life. We recognise that it takes years to phase out nuclear power plants and that they will continue to operate during that time, but most plants owned by British Energy are due to be decommissioned within the next 30 years. In Scotland, Hunterston is due to shut by 2030 and Torness by 2024. So why put huge sums into British Energy? If we are going to decommission existing stations, would it not make more sense to allow it to go into administration and gradually run it down within that period as the plants come to the end of their technological lives?

Even the most enthusiastic projections for British Energy do not predict that it will be able to make anything other than a minimal contribution to its liabilities over the remaining lifetime of the plants even if they run successfully and at full capacity, which is a major assumption given the difficulties recently experienced at some plants that have had to shut down. The shut-down earlier this year at Torness contributed to the financial difficulties in which British Energy now finds itself.

Mr. Djanogly: As I understand it, if we take out the start-up costs, such companies run efficiently and around profitability, which is the opposite of what the hon. Gentleman claims.

Mr. Weir: I do not know that it is. Both start-up and run-down costs are associated with the company. The problem is that the industry, partly because of its historic liabilities, is uneconomic, so the energy that it produces is uneconomic. Bonds were mentioned and the hon. Member for Cities of London and Westminster (Mr. Field) said that the City would set its own level if they were issued. But the Secretary of State noted in her statement on 28 November that British Energy attempted a bond issue in the United States in the summer that was unsuccessful. We must question whether money could be raised in the private sector.

Whatever route we take—whether British Energy remains in the private sector or is effectively renationalised—the taxpayer will pick up the bill. There is little sense in going through the restructuring plan unless the Government intend to expand nuclear power.

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