| Previous Section | Index | Home Page |
6 Feb 2003 : Column 501—continued
Dr. Cable: I want to say just a few words in this debate, which is essentially about the implications of the possibility of public ownership and the effect that that could have on the industry.
I do not want to dwell on the history of privatisation, but the truth is that it is a very mixed story. The privatised company got its assets at an almost ridiculously cheap price, having written down not just the decommissioning liabilities but almost all the capital as well. Private ownership contained a positive story in respect of plant management, and the hon. Member for Reigate (Mr. Blunt) was right to draw attention to that. However, it was coupled with enormous strategic errors in plant acquisition, failures to diversify and unseemly short-sighted greed. Even at this very late stage, the departing chief executive is scrambling over the terms of his terminal contract in a way that belittles the whole episode.
I do not have dogmatic views about public ownership in general. In some cases, it is probably the most effective and appropriate form of organisation. That would be true in the case of a national network monopoly, and the railway system is the most obvious example of that. However, the energy industry is not that type of industry. It is competitive and there is no particular reason for the Government to own nuclear power plants any more than they should own gas-generating plants, chemical plants or steel factories. There is no reason for that whatever.
Although I do not agree with everything that the hon. Member for Reigate said, he was absolutely right to stress the fact that private ownership has at least the merit of transparency. Companies have to report to the market. Under the listing rules, it is clear when a company is trading profitably and when it is not. He raised the valuable point about the Magnox reactors, which we have not mentioned enough in the debate. They are older and less efficient, but they are happily plodding along while British Energy has been forced to the brink of bankruptcy. That is very odd, and it relates to the way in which the public sector organisation is funded.
The hon. Gentleman rightly said that the position of the Liberal Democrats is not the same as his, but perhaps a double negative is involved. I do not hold a doctrinal view about the future role of nuclear power. From what we know at present, the economics of nuclear power under its present technology is not attractive and does not make sense. That is why I have argued in the past for a tougher approach to the bail-out. I have also said that there may be an argument for premature closure. I do not, however, push that as a matter of dogma, but the hon. Member for Ochil (Mr. O'Neill) hinted at why that argument might apply. As plants approach the end of their lives, safety and other costs tend to rise.
If a new set of technologies comes along that enables the private sector to produce nuclear power competitively and cleanly in the long term and to internalise all the decommissioning costs, good luck to the companies in that sector. I would certainly not try to ban them on doctrinal grounds. My concern is much more with the public sector. If the industry goes into the public sector, it is much more likely that the economics of new nuclear power will be fudged and that we will have a new generation of nuclear power stations for bad economic reasons. In that sense, I take the opposite view to the hon. Member for Reigate. None the less, the essence of his argument is valid, and I will support the amendment if it is put to a vote.
Mr. Weir: This brief debate illustrates clearly the point made earlier by the hon. Member for Bury, North (Mr. Chaytor) about the cross-currents between pro-and anti-nuclear spokesmen. I very much agree with what the hon. Member for Stroud (Mr. Drew) said, but from the opposite angle. It seems to me that there is a logical inconsistency in the position adopted by the Opposition in calling for the company to go into administration and opposing the prospect of it then being taken into public ownership. Inevitably, if the company goes into administration, as I said previously, the liabilities, at least, of British Energy would fall to the Government. I reiterate that the Public Accounts Committee report on the state of British Energy in 1999 confirmed that the taxpayer is the guarantor of last resort, and that if the company falls, the Government must pick up the pieces. Again, the Library research paper states categorically that if British Energy goes into administration, all its nuclear liabilities would fall to the Government.
The effect, therefore, of removing paragraphs (b) and (c) would be that if the restructuring failed and the company went into administration, the liabilities would fall to the Government, but they would not be in a
position to pick up the assets and renationalise the company. That would be a shame because, from my point of view, as I said earlier, nuclear stations should be gradually run down and decommissioned at the end of their lifetime. The best way to do that is in public ownership rather than private ownership. I will therefore oppose the amendment.My one worry about paragraphs (b) and (c) is that it is not stated that the companies would be nationalised. Furthermore, the Government are given the option—the hon. Member for Huntingdon (Mr. Djanogly) had a point in this regard—to take over shares in the company, not from an administration, although it is correct that the administrator would try to sell off assets, but before the company goes into administration. The Government could buy shares in British Energy or one of its subsidiary companies and, in effect, provide more cash aid by the back door. Instead of doing so through clause 1(1)(a), they could take a stake in the company and leave it in the private sector, but invest Government funds in it. That would be undesirable.
On balance, I would be in favour of the company coming back into public ownership to be wound down, and I will oppose the amendment.
Mr. Wilson: I sense a degree of intellectual confusion, if that is not too strong a term, on the Opposition Front Bench. We do not want to renationalise British Energy. We want it to be successfully restructured within the private sector. We have spent most of the afternoon discussing amendments tabled by all the Opposition parties that are specifically opposed to our preference for restructuring in the private sector. Only if those amendments had prevailed, and we had gone down the chosen path of administration while ruling out restructuring within the private sector, would the dread spectre of renationalisation, which was raised by the Opposition spokesman—or public ownership in any form—arise. They are the authors of the scenario—their preferred scenario—of administration, which would be the prerequisite for what they now say that they oppose: the public sector becoming the owner of the company.
Mr. Blunt: That is not the case at all. Is the Minister saying that if the company goes into administration, there are no assets to be put back into the private sector by an administrator? We know that the plants generate both power and cash sitting on their own. Of course there are assets to sell to the private sector. That is what an administrator would do. We are then into a discussion about what liabilities the Government take on, liabilities implicit since the company was formed and put into the private sector, and now being made explicit since the company had to run to the Government for a loan.
4.30 pm
Mr. Wilson: The hon. Gentleman has not helped his case. There is no dispute about the fact that if the company is in administration, there is either a public sector direction or a private sector direction for it to go in. Indeed, I would say that if it were in administration, we would still prefer a private sector outcome. The
Government as owner would be the last resort, at present the most likely resort, as I do not see queues of prospective buyers forming.The intellectual inconsistency of what the Opposition are proposing is that those options would not arise if our preferred option of restructuring within the private sector—while always keeping the administration route as an alternative—prevailed. There is no dubiety about this. Only if the administration route is followed does the possibility of public ownership even arise.
Mr. Blunt: When other companies go into administration the Government do not rush to the House to ask for authority to buy their shares and take them into public ownership. They let the administrator get on with it. Why cannot that happen in this instance?
Mr. Wilson: Because nuclear is different. If the hon. Gentleman does not understand that at this juncture in our deliberations, I despair. Other companies, even other power companies, can go to the wall. Though it is sad when jobs are lost, one can turn the key and walk away if nobody buys them, and that is the end of the story. In nuclear power generation that is the one thing that cannot be done. There must be an owner.
The real alternative implicit in the amendment is that if there were no private sector buyer and no Government buyer, the administrator would run the company to the year dot. Of course, that would depend on the views of the nuclear regulators. We cannot just let any old administrator run a nuclear power company. For all those reasons, we return to the argument that we need maximum flexibility to allow for all the options that may arise in the weeks and months ahead.
The daftness of all this is that I agree with many of the premises that the hon. Member for Reigate put forward before drawing entirely the wrong conclusion. I agree, of course, that it would be foolish to close down the nuclear option. I agree entirely that if at some stage there is nuclear new build, it is the private sector that must invest in it. Therefore, there is no vested interest from my perspective in the renationalisation of the company.
I also entirely agree with what the hon. Gentleman says about the performance and efforts of the work force in the nuclear power stations. I hope that we all agree that whatever the problems of British Energy, they are in no way attributable to those who work in the plants.
For all the reasons I have given, the fact that 22 per cent. of our electricity comes from nuclear, and because we have the obligation to maintain the entirely safe operation of the stations, we need flexibility in order to respond to the full range of circumstances.
I return to the point that I made in the previous debate and on Second Reading, that this is in no way an ideological Bill. It is a pragmatic Bill, responding to a set of circumstances that are not of our making and not of our desire. We deserve the Committee's support in giving ourselves the ability to respond to all eventualities.
Would it increase political uncertainty and discourage private sector investment if we took this power to respond to the eventuality of the Government having to take over? I do not think that it would. We have said that we stand ready to step in and acquire British Energy as owner of last resort in the event that a
private sector buyer does not come forward. The market—the private sector—understands full well that we are not pursuing a hidden agenda to renationalise British Energy. There is no such signal to interpret.I was asked whether administration and public ownership would spell the end of private sector investment, so making nuclear new build impossible. Taking British Energy into public ownership, even in the short term, would not preclude private sector involvement in the future. As my hon. Friend the Member for Stroud (Mr. Drew) explained, there are models abroad, specifically in north America, of nuclear stations that are owned by the public sector, which are managed and operated by the private sector. There is no sharp dividing line, as the Opposition implied, between public and private sectors.
Amendment No. 1 and consequential amendments would remove the explicit authority that we require to respond to the full range of eventualities. That would send out the wrong signals. Paragraphs (b) and (c) represent prudent contingency planning by the Government. They are not part of an ideological drive to renationalise the company, but form part of a package of measures that will ensure that the Government are prepared for every eventuality.
Question put, That the amendment be made:—
The Committee divided: Ayes 154, Noes 309.
| Next Section
| Index | Home Page |