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6 Feb 2003 : Column 514—continued

Undertakings to Make Grants Under Schedule 12 to be Disregarded for Tax Purposes

Amendment made: No.19, in page 3, line 16, after 'has', insert 'the'.—[Mr. Wilson.]

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Clause 4, as amended, ordered to stand part of the Bill.
Clause 5 ordered to stand part of the Bill.
Bill reported, with an amendment.
Order for Third Reading read.

5.14 pm

Mr. Wilson: I beg to move, That the Bill be now read the Third time.

I thank Members on both sides of the House for another lively and interesting set of debates. What with our recent Second Reading debate and today's proceedings, we have given the Bill's key principles a thorough airing. There was a slight frisson of excitement on the Opposition Benches as we concluded our previous debate, and perhaps I should clarify the point of order raised by the hon. Member for Reigate (Mr. Blunt). I was referring in particular to clause 3, which, as I said, is generic. The hon. Gentleman's misunderstanding might stem from the fact that although clause 1 relates exclusively to British Energy, the rest of the Bill is not framed so specifically. I hope that that provides him with the explanation that he seeks.

Last week, we had a good debate about the broader principles that underpin our support for British Energy, and perhaps to a lesser extent about the Bill itself. We moved into the realms of wider energy policy, and I can assure the House that there will be a further opportunity to discuss the wider issues in the context of the energy White Paper when it is published according to the time scale that I have already defined.

Hon. Members are now aware that this is a small Bill, and as I have said, it does not stem from any ideological wish to renationalise, or from any particular political direction. It is a pragmatic response to a particular set of circumstances that are not of our making. It will ensure that the Government are well placed to deal with any eventuality in relation to British Energy, whether the solvent restructuring deal announced on 28 November ultimately succeeds or fails.

As I said, the current situation is not of our making. Last week, we had some discussion of the contributory factors to British Energy's difficulties, but the reality is that we are dealing with a company with serious problems. It had to face up to the need for restructuring, and, as I have always acknowledged, it encountered some very difficult market conditions. Equally, it made some serious mistakes, leading to the crisis that came to the fore in November.

Mr. Blunt: Does the Minister accept any responsibility for the Government's contribution to British Energy's difficulties?

Mr. Wilson: I do not think so, at least not in those terms. I suppose that, if one draws things widely enough, everything contributes to the various circumstances in the sector, but I should point out that British Energy specifically welcomed the changes in the electricity market when they were introduced. It is clear that, if it had taken certain steps, or avoided the steps that it did take, it would have been much better placed to deal with the conditions that arose.

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I have always made it clear that I am not in the business of recriminations. I have known the company for a very long time, including in its pre-privatisation guises. One thing that we have agreed on throughout these debates is that no fault should be attributed to the people who work in the power stations. They are the somewhat uncertain victims of this situation, and I have no wish to go back into history and point the finger. We are where we are. We have a nuclear power company that contributes very substantially to our energy needs, and anyone else who was standing in my place would have had to respond in a roughly similar way to ensure the meeting of two key criteria: security of supply, and the entirely safe operation of nuclear power stations.

Mr. Andrew Lansley (South Cambridgeshire): I am grateful to the Minister for giving way, and for responding substantively to points that I raised on Second Reading, but I would like to return to one of them. He rightly said that the Government are proposing a mechanism for sharing revenues whereby 65 per cent. of available cash will go into the nuclear liabilities fund. However, let me put the point to him again, if I did not explain it well enough.

I was suggesting that the increase in free cash, as it were, might originate from one of two sources. It could come from a reduction in costs on the part of British Energy—the hon. Member for Twickenham (Dr. Cable) talked about that—which should be rewarded and incentivised, or from increases in price in the market place, which might give rise to substantial additional cash for British Energy. Does the Minister think that the proportion of 65 per cent. overall may not be quite right, and that it should be lower if it relates to reductions in costs passing through to British Energy's shareholders, or higher if it is simply the result of increases in prices in the marketplace?

Mr. Wilson: No, I think that the balance is about right. I understand the hon. Gentleman's point and I can see that there is an argument for a more complex arrangement, but there is a great deal in the restructuring package that incentivises good performance and a reduction in costs. Taking a single figure of 65 per cent. will not militate against that, and, if it is achieved through an increase in the price of electricity, and therefore the greater profitability of the company, it is a reasonable proportion. I have written to him about the matter, and I am prepared to continue the debate, but not in the context of the Bill.

I repeat that no matter who was standing here now, they would have to take steps to deal with a set of circumstances that nobody wants and that came upon us over a period of months last year. If I was in the recriminatory stakes, I would have said a lot more about the role of the previous Government—I have been very gentle and alluded to it only in passing. If that had never happened, we would not be in this position tonight, but let us not delve too deeply into history.

This is a pragmatic Bill that responds to a specific set of circumstances. It gives us the flexibility that we need to respond to all eventualities. There is no renationalisation agenda, but equally, in the absence of any obvious suitors from the private sector, that is a possibility that we cannot rule out. Although I fully respect the right and duty of Opposition Members to

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probe and examine our proposals, ultimately we have a lot more in common, as it is recognised that no responsible Government could walk away from such circumstances. In that spirit, I ask the House to support the Bill.

5.22 pm

Mr. Blunt: I can follow the Minister as far as thanking hon. Members for their contributions to the proceedings on Second Reading and today, but I fear that that is about it. I thank the forces of darkness—Greenpeace and Friends of the Earth—for their advice and assistance. When they are lined up with the forces of conservatism, we have an interesting alliance ranged against the Government. I should also commiserate with the Minister. I think that for him this is a particularly sad piece of legislation because of what it will mean for the future of nuclear generation if it is allowed to go through in its current guise.

It is a dreadful little Bill. We, as a House of Commons, have just resisted the principle of any limit on expenditure by the Executive. It is an astonishing state of affairs that the House of Commons can so fail to discharge its obligations to the people who put us here. In Committee, the hon. Member for Bury, North (Mr. Chaytor) said that the situation was ambiguous in that people on either side of the argument could be on either side of the Bill.

Dr. Ladyman: I thought that we established earlier today that European law means that any expenditure by the Government has to be the minimum possible to carry out the restructuring, so we have not abrogated our responsibilities as the hon. Gentleman suggests.

Mr. Blunt: I assure the hon. Gentleman that the proposed reconstruction of British Energy will be more expensive than putting the company into administration, which is what should happen.

Mr. Wilson: I want to probe the hon. Gentleman a little more on this matter. I made it clear that the possibility of raising or even abolishing the spending limit was only a cover against an extreme set of circumstances. No one wants or expects such circumstances to come about. Will the hon. Gentleman say what the Opposition view is about what should happen if the company failed catastrophically? Its liabilities would still have to be met. Would the Opposition set a limit on the amount of money that could be spent on dealing with the liabilities of the nuclear industry, in the absence of the company that previously had responsibility for them?

Mr. Blunt: The answer is obvious. The company would go into administration, after which an assessment would be made of which liabilities it would be appropriate for the Government to take on, and which could be recovered from a sale of company assets by the administrator. As the Minister made clear in Committee, any immediate charges that fell to the taxpayer would come under the short-term provisions of the appropriations legislation. Any responsible Executive would come to Parliament to seek authority for the expenditure incurred.

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In contrast, this Government have come to Parliament to demand an unlimited amount of money, to be spent in an unlimited number of ways. The Bill has been subject to a limited amount of scrutiny. The Minister said that the Bill had been given a thorough airing, but I disagree: clause 2 has not been looked at in detail, because we wanted to put a limit on Government expenditure. The House has not considered the issues involved properly at all, and there has been no explanation as to why the programme motion did not allow proper exploration of the serious contingent liabilities on the taxpayer that will flow from the Bill if something is not done about it in another place.

It is dreadful that no hon. Member, of any party, who is not a member of the Executive has been able to discharge the duty to protect the interests of the taxpayer. That is a pretty sad reflection of what passes for parliamentary scrutiny.

If the Bill is given a Third Reading, the Government will have secured the ability to spend an unlimited amount of taxpayer's money on this exercise. I want to make a formal appeal from the Dispatch Box, on behalf of Her Majesty's Opposition, to the Chairman of the Select Committee on Trade and Industry, the hon. Member for Ochil (Mr. O'Neill). I hope that he and his Committee continue to supervise the affairs of British Energy, and to monitor the way in which the Government go about the company's rescue. Also, I want to go on record with a request to the Chairman of the Select Committee on Public Accounts, my hon. Friend the Member for Gainsborough (Mr. Leigh). I hope that he and his Committee, with the assistance of the National Audit Office, will investigate all the expenditure associated with this affair.

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