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19 Nov 2008 : Column 123WH—continued
4.28 pm
The Minister of State, Department of Energy and Climate Change (Mr. Mike O'Brien): This issue arose as a result of an administrative error by a junior official in the Department for Business, Enterprise and Regulatory Reform. That official was told that the letter to the Chairman of the Public Accounts Committee on this matter needed to go in the Library. It did not go in the Library. When it was checked, some months later and after the parliamentary recess, whether that letter had gone in the Library, it was found that it had not gone in. On that day, that letter was put in the Library.
In the last 15 minutes or so, I have heard references to cover-up, to conspiracies and to contempt of Parliament, and I say this to my hon. Friend the Member for Newport, West (Paul Flynn): his concoction of conspiracy theory, innuendo and hyperbole has reached new heights in the House. It is the case that there was a minor error by a junior official, who should not be crucified for that error by my hon. Friend; that would be unworthy of my hon. Friend.
This happened within the Department. There was no requirement on the then Minister of State, my right hon. Friend the Member for Croydon, North (Malcolm
Wicks), to place the letter in the Library. He took the view that that was necessary in order to be open about this matter. An error was made by a junior Department official—humans are fallible—but I expect better of the hon. Gentleman than to talk about cover-ups and conspiracy. This attempt to manufacture a mountain out of such a tiny molehill is ridiculous.
The idea that the letter was secret is complete nonsense; it is a farce. Letters to the Chairman of the Select Committee on Public Accounts are not secret documents. They belong to the Committee, and members of the Committee can see them and refer them to the press. Far from trying to mount some sort of cover-up, as my hon. Friend suggests, my right hon. Friend was trying to be open with the House of Commons and to make sure that Members knew what was going on. I utterly refute the allegations, innuendo and concoctions that my hon. Friend has put forward. It is unworthy of him, and I expected much more from him.
Paul Flynn: Will the Minister explain why the Members who were interested in this matter were not informed? There is a great deal more to this. The Department tried to blame the Library, saying that it had not told the truth. The Department also said, in a press release to the Western Mail, that the reason why it was done was that it was a rushed procedure and it did not have any time. The Department has been wholly consistent on that, but it has given two versions. The first is that it did not have time and had to rush things through, and the second is the one that the Minister is giving now, that there was a failure.
Mr. O'Brien: I am sorry that my hon. Friend believes that he should be specifically informed of such matters above other Members. The two people who were informed were those who were clearly in a position to get the letter. The Public Accounts Committee Chairman was to receive the letter and would therefore clearly be informed. The letter was put in the Library to make it available to anyone who wanted to read it.
If my hon. Friend has a long-term opposition to nuclear, that is fine. I have no problem with that. Many people in the House have long-term oppositions to nuclear, but they do not concoct stories, conspiracies and cover-ups out of nothing as he has done. I have seldom felt so worried by the way in which stories are made up out of nothing as when I was listening to him today. There has been a regrettable error, and the Department regrets that things were not done as they should have been. My right hon. Friend wanted things to be done properly and ordered them to be done. He took a decision, not because the procedure required him to, but because he wanted things to be done openly. My hon. Friend suggests that the opposite was the case, but he is simply wrong.
My hon. Friend accuses the Government of dumping liability on the public, but who on earth does he think owned those nuclear power stations? Does he think that they were somehow owned by a private company when they were created? They were owned by the public—he knows that. No liability is being dumped on anyone, secretly or otherwise; there is a public liability. The Nuclear Decommissioning Authority has been set up to deal with the public liabilities that we have as a country and as a Government. We are trying to deal with those
liabilities in a sensible, coherent way, and to ensure that that is done openly and with full consultation. There has been widespread consultation on this matter. The idea that something is happening secretly is nonsensical, as this matter has been addressed in the blaze of publicity.
The nature of the indemnity is very clear. There is a legislative restriction, in terms of the Government’s liability, so that they are able to deal with those liabilities if an incident happens in the UK. Under the Paris and Brussels conventions, other countries have signed up to agreements on how nuclear incidents might be dealt with, but the United States is not a signatory to some of those. My hon. Friend says that we are failing to put a value on the indemnity, but what is the indemnity about? It concerns the remote possibility that, if an incident happened in the UK, an American court might take a view about a court fine or settlement over there.
All the companies that bid in the process said that they were quite to happy to undertake the task, but that they would not be responsible for a liability that some American or other court, which has not signed the Brussels and Paris conventions, might impose. The NDA therefore decided, quite properly and openly, that it would have to come forward with the indemnity. When that was done, my right hon. Friend wrote to the Public Accounts Committee, and that letter was to go into the Library. An administrative error, and nothing more, resulted in that not happening. The day that we found out that it had not happened, it was immediately corrected. That is what happened, and all the other claims do not add up to a hill of beans, if we are talking about hills and mountains.
Mr. Jamie Reed (Copeland) (Lab): I am gratified by the way in which my hon. and learned Friend is dissecting the incoherent concoction that has been put before him. Much has been said about the speed with which the process has been carried out, but does he agree that speed was of the essence? The regulator, the NDA and the Government all wanted the process to be addressed with speed, and speed was essential for operations at the Sellafield site to remain both smooth and safe.
Mr. O'Brien: That is the case. We had to undertake the process, for which negotiations and bids were received, and the letter of indemnity had to be agreed at the end of that process. As soon as it was agreed, it was decided that Parliament should be informed and that a copy of the letter to the Chairman should be put in the Library.
I want to make it clear that it is the Government’s responsibility to deal with and to pay for decommissioning and to clean up our historical civil nuclear liability. The NDA’s mission is therefore funded from the public purse, and is subject to parliamentary approval for expenditure and funding in the normal way. Since its creation, significant resources have been allocated to decommissioning. The NDA’s total spend was £2.4 billion in 2005-06, rising to £2.8 billion in 2007-08. Its budget for the next three years is set to rise to more than
£8 billion, which is the largest amount ever spent on UK civil nuclear clean-up programmes over that sort of period.
The competition at the heart of this issue was also at the heart of the NDA’s mission to deliver fast, cost-effective clean-up. In March, the competition for the low-level waste facility near Drigg was completed, and the Sellafield competition is on course for completion on 24 November. I am letting my hon. Friend the Member for Newport, West know that. Those are significant milestones, and indemnity is a common feature in those sorts of commercial contracts.
In the case of the NDA’s estate, the decision whether to grant a nuclear or other form of indemnity to a contractor is a commercial matter for the NDA. It approaches each competition on a case-by-case basis. If giving indemnity represents good value for money, it will consider giving it on sensible commercial terms—I should like to emphasise that point.
Paul Flynn: Will the Minister give way?
Mr. O'Brien: I have given way already. It is about time that I set out my case to my hon. Friend, because I would like him to listen to one or two things. We have listened to his views at some length, so perhaps he would care to listen to some of my replies to his points.
In the UK, claims relating to third-party damage arising out of nuclear occurrence are exclusively regulated by the Nuclear Installations Act 1965, which implemented the principles long established in the Paris and Brussels conventions on third-party nuclear liability. The NIA restricts compensation claims to personal injury and property damage caused by a nuclear incident in the UK. It also excludes from making claims those who are not UK citizens or from other Paris and Brussels signatory states. The United States is not part of that arrangement.
Therefore, there is an extremely small risk—I emphasise that—of non-eligible victims taking their claims to courts elsewhere, possibly the country of the contractor, such as the United States. The NIA and the Paris convention place a financial cap on the liability of the operator, currently £140 million for standard sites, in return for the acceptance of strict and exclusive liability. Therefore, claimants do not have to prove fault, and all claims are channelled to the operator, not to his supply chains. However, any contractor whose home country is not party to the convention risks unlimited liability if an action is brought in courts in their country, for instance the US. Parties cannot obtain insurance against that. An indemnity was therefore considered appropriate against the risk of such claims arising from a nuclear incident that falls outside the protections of the Nuclear Installations Act and the Paris and Brussels conventions. There are no insurance facilities available for that risk.
I say to my hon. Friend that the matters in question have been dealt with appropriately. I apologise for the error of a junior official in the Department, and he was right to take us to task, but not in the way in which he did. He exaggerated, went way over the top in his condemnations and traduced my right hon. Friend who was seeking to be open with him and other Members, not, as he suggested, to form some sort of cover-up.
Remploy
4.42 pm
Annette Brooke (Mid-Dorset and North Poole) (LD): For the sake of the Minister, whom I welcome to his new role, I should like to state my position. I support the overall movement towards finding suitable employment for disabled people in an inclusive manner and a mainstream setting. However, we are where we are with the historic Remploy set-up. Many workers have been in a protected environment for so long that it is not realistic to expect them all to transfer to new work settings. One of the Remploy workers at Poole had been there for more than 40 years, and a further 10 had been there for between 20 and 35 years. There will always be scope for transitional arrangements and specialised training for both employers and employees.
I have been involved in discussions on the Poole Remploy factory since 2006. In May 2007, it was announced that the factory would be closed and the manufacturing of marine products, including lifejackets, transferred entirely to the Leven factory in Scotland. That was an unfortunate decision, because location-wise, Poole ticks all the boxes. It is close to existing markets, and with the Royal National Lifeboat Institution headquarters in Poole, there was an opportunity to generate many more orders through strong management and leadership. That could also have led to more efficiency in production and better profit margins.
The closure of the Poole factory was at least deferred when in November, the then Secretary of State, the right hon. Member for Neath (Mr. Hain), announced that there would be 15 fewer factory closures, and that the Poole factory would not be closed. For Poole, the challenge was great. New products had to be found and the subsidy per worker reduced to £9,000 by the end of this financial year. It was anticipated that there would be more scope for public procurement to generate additional work for Remploy factories. The Poole site was retained specifically to develop a plan for potential increases in business arising from the new regulations on public procurement. The stated aim was to supply local authorities in the south-west region.
The National Audit Office wrote to me and confirmed that the new public procurement regulations should allow local authorities greater opportunities to contract work to Remploy. I believe that 12 factories in total have the challenge of securing orders from public procurement, and I appreciate that that is at central Government as well as local government level. Indeed, there is already such public procurement by Departments. However, will the explain Minister whether any of those 12 factories has succeeded in getting public procurement from local authorities?
Throughout my tale of woe, I wish to place on record my thanks and admiration for the work of Gerry Starkey and Iain Anderson, Remploy employees who have worked very hard to secure the future of the Poole factory, and Lorraine Sheen, the trade union co-ordinator who returned to the factory to try to keep the show on the road. I also thank the Minister’s immediate predecessor, the right hon. Member for Stirling (Mrs. McGuire), who attended to my many questions with courtesy and was supportive throughout the past two and a half years.
Following the then Secretary of State’s statement in November 2007, I eventually received a letter from Remploy dated 25 January 2008, basically asking me to participate in a local champions group. I was more than willing to do so, as it was really just an extension of the support that I had already given the factory. The inaugural meeting was supposed to be in February, but despite my best efforts, it did not take place until 14 April. Before the first champions meeting had even taken place, as I said in a Westminster Hall debate in March, machinery was being removed from the Poole factory and the existing orders were coming to an end. Employees were offered increased redundancy pay.
There was uncertainty and bewilderment among the employees, because they did not even know what the new product was and because the factory was being run down. Many accepted a redundancy offer, even though it might not have been in their long-term best interests, as many of them had been at the factory a very long time and were unlikely to be able to adapt to mainstream work. I worry greatly that some of them are now isolated and just sitting at home. At the start of the process, the Poole factory had 43 supported workers. Now it has 19, with varying levels of disability. It used to buzz with activity and happiness, but in recent times it has been depressing to visit, with the remaining workers sitting around with little or nothing to do.
As a local champion, I made contact with an enormous range of organisations in Dorset: the primary care trusts, the police, the fire service, the health service, all the local councils at different levels, the local universities and colleges and the private sector—everybody I could think of. The initial response was really positive, showing a genuine desire to support the factory. The exception was Poole borough council, which did not send a representative to the inaugural champions group meeting. Early on, its chief executive expressed to me the view that it was cruel to the remaining workers to keep the factory open with no work, and that Remploy clearly had an agenda to close it as soon as possible. Some of the other councils have at least referred other business to Gerry Starkey, but no public procurement has been achieved.
Was the new beginning, with public procurement, just a myth? Is the Poole factory being deliberately closed by slow poison? If Poole borough council had given more support, would orders from other local authorities have followed? A reply that I received from the leader of Poole council stated:
“Both the Council and myself, along with many others, have supported the retention of the Remploy factory and the employment opportunities it provides within the Borough.”
Fine words, and indeed councillors from the ruling group joined the march in the town. However, it continued:
“As I know you are aware, the placing of Contracts by the Borough is strictly governed by law and our own Standing Orders.”
How do we interpret that? Maybe the standing orders could have been changed.
I insisted that a meeting take place between Poole borough council and Remploy in August, but as far as I know, there were no productive outcomes. Indeed, the previous Minister reported to me that Remploy had said that it had
“exhausted all local public sector prospects in Poole and Bournemouth as Remploy’s strenuous effort has resulted in no opportunity being offered for them to quote for any of their Local Public Sales services, other than the suggestion that Remploy could respond to tender invitations just like everyone else.”
A further question to the Minister is why the Poole factory was given the task of supplying local authorities in the south-west if it was not possible to have a route into public procurement which did not require entering a full tendering process. Obviously, the work had to be suitable for the work force, which placed a further limitation on seeking orders. I honestly do not know whether the failure to achieve orders from local authorities was because of Poole borough council’s lack of co-operation and support, because false hopes were raised by the so-called relaxation of the regulations for public procurement or because other bodies do not want to engage with Remploy because they have a low opinion of the national company. I hope that the Minister can throw some light on that.
In recent times, Gerry and Iain have been able to secure small orders from the private sector, and I was pleased to hear yesterday that the factory is at work doing electrical mechanical assembly. The employees have had some training in that, and there is enough work until Christmas. However, I received a letter from Alan Hill, Remploy’s director of enterprise businesses, dated 8 October. He writes that
“continued employment at Poole depends on winning new business and real evidence in the current financial year on reducing the loss per disabled employee to £10,400”—
a slight discrepancy, but not to worry. He continues:
“The site was retained in November 2007 in anticipation of increased business arising from new procurement regulations surrounding reserving contracts for supported factories.”
John Barrett (Edinburgh, West) (LD): I agree with everything that my hon. Friend has said. Does she agree that local councils must be made aware of their obligations to tender for the high-quality products that are available at Remploy factories? Through the new public procurement procedures, they could themselves be saviours of those factories.
Annette Brooke: I thank my hon. Friend for his intervention. There must be scope for working with councils to understand why Remploy has not secured any orders whatsoever.
“The site has had little or no work for 6 months. The current loss per supported person at Poole is just over £24,500 per annum and the factory has lost £232,000 in the first 6 months of the year. Despite efforts by the local management and sales team we have not been able to secure large quantities of public sector procurement and we have therefore widened the search for opportunities to include the private sector also. Time is short and we are not receiving support from the stakeholders locally to help guarantee the future of the factory. I trust we can rely on you to use your best endeavours.”
He can rely on me, but I was so angry when I received that letter that I was determined to secure an Adjournment debate and make the matter public.
Is it surprising that the cost per employee is so high, given that work was taken away from the factory before there was any opportunity to get new work in its place. At least three months were wasted pursuing public procurement. That seems to have been a wild goose chase not of the local factory’s making but perhaps caused by central Government and Remploy nationally or by the Poole Conservative-controlled council’s failure to give the factory genuine support.
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