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(b) the borrower or a person connected with the borrower makes a disposal of any security at any time under the arrangement to or for the benefit of the lender or a person connected with the lender, and
13A (1) In Schedule 9 to FA 1996 (loan relationships: special computational provisions), paragraph 15 (disposal or acquisition made in pursuance of repo and stock-lending arrangements not to be related transaction) is amended as follows.
(b) involving an agreement made on or after that date providing for a transfer giving effect to the entitlement or requirement described in paragraph (b) of that sub-paragraph otherwise than by B.. [Mr. Watts.]
Rob Marris: I wanted another run around the block on the UK nuclear industry from a financial point of view. Clauses 99 and 100 go hand in hand in amending the Energy Act 2004. Clause 99 deals with British Nuclear Fuels Ltd and clause 100 covers the Nuclear Decommissioning Authority.
British Nuclear Fuels Ltd is a Government company, which has a turnover of approximately £3.5 billion. It appears to me, prima facie, that clause 99 is part of a device to fatten up BNFL from a tax point of view because of the sell-offs that it proposes to make. It will sell British Nuclear Group, and the rumours are that that is expected to raise between £500 million and £1 billion. It proposes to sell BNG America and is in advanced talks with Toshiba to sell Westinghouse this autumn for a reported £5.4 billion. It also owns a third of Uranco, a uranium reprocessing company, the other two thirds of which are owned in the Netherlands and Germany. British Nuclear Fuels Ltd is therefore a sprawling, large company, which deals with a large industry. Whatever happens in future, it will continue, for many years, to play a significant part in energy delivery and have a significant environmental impact in the United Kingdom.
The amendments provided in this clause will preserve the intended effect of section 29
and ensure that a BNFL site licensee company does not incur corporation tax charges or acquire taxable losses as a consequence of the NDA taking responsibility for decommissioning and cleaning-up liabilities.
British Nuclear Group is a site-management and clean-up company, a contractor for the Governments Nuclear Decommissioning Authority and, as I said, a subsidiary of BNFL. It remains state owned, although BNFL may sell it off sometime in the next 12 months. British Nuclear Group has responsibility for Sellafield, formerly Windscale, for the older Members among us, and it operates 14 sites in the UK. There is also BNG America, which is a different operation, albeit owned by BNFL.
The nuclear industry has a history of lying about figures. That is widely accepted, although whether it continues to do so is a matter for debate. However, proponents of nuclear power, and especially the nuclear industry in the 1960s, 1970s and 1980s, made statements that were clearly inaccurate on many counts. In some cases, they were outright lies rather than simply optimistic projections. The nuclear industry around the world is, in every case, heavily subsidised directly or indirectly by Governments, including in the UK.
David Howarth (Cambridge) (LD): Does the hon. Gentleman agree that one of the difficulties with the two clauses is that nothing appeared about them in the press releases that accompanied the Budget resolutions and that the Red Book contains nothing about how much they might cost? The Government might be trusted more on that issue if such figures were available.
Rob Marris: It is part of the process of parliamentary scrutiny, in which we are currently engaged, to try to tease some of that information out of the Government. It might have been preferable, if the figures were available, for them to be in the Red Book. I suspectalthough I do not knowthat part of the Governments response will be to say that we are considering a recirculation exercise for corporation tax liabilities, allowable tax losses and so on. That is a strong suspicion, based on what my right hon. Friend the Paymaster General said when we had a brief debate on the matter in the Standing Committee, on which I served. I would like, as I said, to tease out some figures, and I am sure that the hon. Gentleman and others would also like to do so. Leaving aside all the environmental issues about nuclear power, which it is not appropriate for us to discuss todayI am sure that you would rule me out of order if I tried to do so, Mr. Deputy Speakerthere are clear financial questions to be asked about the nuclear industry, both in the United Kingdom and around the world.
As I was saying, the industry is subsidised around the world. It is a private industry in the United States, where it is heavily subsidised. No nuclear reactor has been built or commissioned in the USA, that bastion of free enterprise, for at least 25 years because the figures do not stand up. In Finland, which has been widely quoted recently because it is opening up nuclear powerquite controversially, perhaps, for a Scandinavian countrythere are direct and very indirect subsidies for the power stations that are being built.
I want to try to find out whether the Government are subsidising the nuclear industry in this country more than is commonly known, because of course there is a debate about whether there should be more nuclear power stations built in the United Kingdom. It is interesting to note, as I have teased out in the House before by parliamentary questions and in the Trade and Industry Committee, on which I serve, that any company could now apply to build a new nuclear power station in the United Kingdom.
Dawn Primarolo: The clauses deal with the history of nuclear power stations and with decommissioning today; they do not go forward in any way. I will cover that in my remarks. We are talking about responsibilities for decommissioning power stations that are already in operation and need to be decommissioned.
Rob Marris: Yes, of course these are in a sense backward-looking clauses, but in the context of a public debate about nuclear energy and what we do with the nuclear power stations and the spent materials that we havea debate that will develop this summer when the energy review is publishedwe need to try to be aware of the historic cost of nuclear power, as perhaps evidenced in these two clauses, to inform that public debate about the possible future cost of nuclear power.
Mr. Paul Goodman (Wycombe) (Con): The Paymaster General said a moment ago, no doubt accurately, that these clauses are about looking back. But is it not important at least to explore who will be doing this clear-up work, given that it would appear that a private company may be doing it and enjoying tax advantages that were designed for the public sector?
Rob Marris: I quite agree, and that is what I am trying to find out. Whether we talk about existing nuclear power stations or a new groupwhat the industry tries to dress up as a fleetwe have to look at the question of dealing with spent materials, radioactive waste and so on. That is particularly true of the radioactive waste that we already know exists, because it is here, and the waste that we know will be generated in the next 13 to 15 years, until 2020, the life of the current nuclear power stations. The Nuclear Decommissioning Authority is a Government body, but as the hon. Gentleman points out, it uses British Nuclear Group as a subcontractor for site management, clean-up and so on, and BNG is likely to be privatised in the next 12 months.
I would like to know whether there are any tax breaks for the existing nuclear industry because that must inform the public debate about the futureor lack of future, whichever it may beof nuclear power stations
in the United Kingdom. One thing that the nuclear industry has historically been very good at is getting hidden subsidies. I am not sure whether clauses 99 and 100 are indicative of that; I want to find that out. It already has a hidden subsidy through the cap on its public liability insurance, because given the liabilities it would be almost impossible, even with reinsurancethe hon. Member for South-West Bedfordshire (Andrew Selous) knows a great deal about that and could correct me if I am wrongto get insurance cover at a premium that would make a nuclear power station viable. There has to be an indirect state subsidy on those liabilities. Clauses 99 and 100 may or may not speak to that, and I wish to find out more.
The amendments provided in this clause will preserve the intended effect of section 30 and ensure that the NDA does not incur corporation tax charges or acquire taxable losses as a consequence of the accounting caused by the imposition of the transitional arrangements.
Rob Marris: As I understand it, the transitional arrangements came in because the European Commission started examining whether there was or is unauthorised state aid in the UK for the nuclear power industry, part of which has been privatised and more of which will be privatised.
Whatever the proponents of the nuclear industry say, we have what I would regard as a dinosaur industry that is using technology, even with the pebble-bed reactors and so on that it is talking abouttechnology that has been around in Germany since, I think, 1958, but which is supposed to be the new generation of nuclear powerthat is about 50 years old. The technology has never been operated anywhere without state subsidy, directly or indirectly. The proponents of a new generation of nuclear power stations are looking forward rather than backwards, which the clauses do, to a situation where there will not be state subsidies. I am a little cynical about that. I have heard it all before. Throughout my adult life I have heard about how there would not be state subsidies, and that we would have electricity too cheap to meter, for example. That never worked out.
We are talking about old technology. It is about 50 years old, as I have said. That is the basic design, however much we talk about advanced gas water and all that, heavy water and can-do reactors, for example. It is, as I have said, old technology. It works in as much as it produces electricity, but it does not work in that it is not economic. Even with todays high energy prices, there are serious questions to be asked about whether the nuclear power that we have, let alone the nuclear power that we may have in future, is economic, given the direct subsidies for the existing nuclear fleet of power stations and the possible subsidies, whether on insurance or guaranteed purchase of electricity, for future nuclear power stations.
As for the environment, we would be much better spending the money on energy conservation and renewables than on a new generation of nuclear power stations, but that is not a debate for today. The debate is whether clauses 99 and 100 are directly or indirectly a hidden subsidy for the nuclear industry that already exists. I hope that today, or perhaps by writing to me, my right hon. Friend the Paymaster General will indicate what the fiscal effects of the two clauses will be on the Government's net balance sheet. The explanatory notes talk about avoiding incurring corporation taxes and a company acquiring taxable losses.
I wanted to get some idea for the entire industry, in as much as it is state owned in the UKthat is pending the sale of larger chunks of it than have already been sold offwhether corporation tax charges that might be avoided by means of clauses 99 and 100 will be greater than the acquired taxable losses that the clauses facilitate in a sort of wiping-out exercise. My right hon. Friend the Paymaster General, perhaps to use my words rather than hers in Standing Committee, referred to these measures being, in a sense, a recirculation of Government money.
There is the fiscal net effectthat is, weighing the avoided corporation tax and the avoided tax write-offs through acquired losses and determining whether that is even or whether there is an imbalance. If there is an imbalance, what is it? That will enable us to have some idea at this stage of whether there will be yet another subsidy to an industry that is financially, let alone environmentally, a failed industry, or whether this is an accounting exercise that results in even stevens at the end. I hope that my right hon. Friend the Paymaster General will elucidate. If notI realise that there may be complex figuresI should like to receive a response in writing at a later date.
Mr. Paul Goodman: I am grateful for the opportunity to speak in this debate. As this might be my last chance to contribute to the Bill, I should like to pause and thank everyone from PricewaterhouseCoopers and elsewhere who has provided me with advice on technical aspects of the Bill over the past few weeks.
It is appropriate to use the word technical for clause 99 because, as the hon. Member for Wolverhampton, South-West (Rob Marris) intimated, it is a difficult provision. As he said, we discussed the clause in Committee, and he will recall that I asked questions about it when it was debated on 6 Juneas, indeed, did he. Having had time to reflect on the debate in Committee, and having reread the relevant proceedings in Hansard, I am not entirely happy.
Dawn Primarolo: While the hon. Gentleman is reflecting, perhaps he and the hon. Member for Falmouth and Camborne (Julia Goldsworthy), if she catches your eye, Mr. Deputy Speaker, will tell the House what their parties said in 2004, when the Energy Bill proceeded through Parliament. The clauses in the Finance Bill correct a mismatch, but the principle was accepted in the House in 2004. I would be interested to know what the two parties said thenthey probably supported the provision.
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