Energy Bill

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Clause 54

Secretary of State’s power of direction
Question proposed, That the clause stand part of the Bill.
Malcolm Wicks: I shall give a brief introduction to the clause. If a person has not complied with an obligation imposed on them by the programme, or if the Secretary of State believes that that person has been engaged in unlawful conduct that he believes may affect the programme, under the powers in the clause, he can direct the person to take action to comply with the obligation or to remedy the effects of any breach. As for unlawful conduct, the person must have been convicted of a criminal act by a United Kingdom court and, if relevant, for the period of appeal to have expired—or if an appeal is made, for it to have run its course.
Before issuing a notice to direct a person, the Secretary of State must consult the interested bodies. If the person does not comply with the direction, the clause will allow the Secretary of State to apply to the High Court for an order. If the High Court decides that the person has failed to comply with the direction, it can order the person to take whatever steps are necessary to ensure that the notice is complied with. Without the clause, there would be no way of ensuring that remedial action could take place if it was considered necessary. At the same time, the constraints contained within the clause, such as the need for an appeal to have run its course, will ensure that the powers cannot be misused. I suggest that the clause stand part of the Bill.
Question put and agreed to.
Clause 54 ordered to stand part of the Bill.
Clauses 55 to 57 ordered to stand part of the Bill.

Clause 58

Power to apply this Chapter to other nuclear installations
Question proposed, That the clause stand part of the Bill.
Malcolm Wicks: This clause recognises the fact that, in due course, companies may come forward with proposals to develop other nuclear installations and facilities that will sustain and support the development of a growing nuclear energy sector. It will apply to installations or facilities that are constructed for a purpose connected with the generation of electricity, such as fuel fabrication and/or decommissioning.
The clause is about future-proofing in this framework, and it is right that we make the most of this legislative opportunity to ensure that the recourse to public funds is remote at all times. If such proposals come forward, we will seek to ensure that the developers of new installations or facilities, which are constructed for a purpose connected to the generation of electricity by nuclear power stations, cover their full decommissioning costs and any waste management costs. We believe that developers of such installations should have to operate in the comprehensive regulatory framework proposed in the Bill.
The clause will give the Secretary of State the power to extend the clauses in the Bill by order under the affirmative procedure to such installations, to ensure that the same provisions can be applied to those facilities. Such an order will be subject to the affirmative procedure, which will provide Parliament with a further opportunity to scrutinise any proposal that comes forward. That is thought to be appropriate on the basis that the provisions will give the Secretary of State the power to extend the scope of the legislation in relevant cases. I suggest that the clause stand part of the Bill.
Question put and agreed to.
Clause 58 ordered to stand part of the Bill.

Clause 59

Co-operation with other public bodies
Question proposed, That the clause stand part of the Bill.
Malcolm Wicks: This clause refers to co-operation and information sharing between the Secretary of State and the interested bodies. When information is relevant to a programme, the clause sets out the framework for the sharing of information that relates to a person—such as a site operator or persons with obligations under a programme, such as trustees, or a body corporate associated with the operator—between the Secretary of State and the interested bodies.
The clause also sets out the framework for those relevant bodies to provide assistance. It will limit the circumstances in which the Secretary of State and the regulatory bodies can share information. It will also apply if the Secretary of State is considering whether to make a modification, deciding whether or not to approve a programme under clause 41 or deciding whether to make a modification under clause 44. It will also apply where a proposal to make a modification to an already approved programme would result in a new obligation being imposed on a body corporate.
Information can only be shared between the Secretary of State and the interested bodies if the Secretary of State thinks that the information is relevant to certain statutory duties of one or more of those bodies. Likewise, the interested bodies can only share information with the Secretary of State if they think that the information is relevant to a function of the Secretary of State under this chapter. The clause will apply regardless of any statutory or other restriction that seeks to prevent a disclosure of information. Any information shared between the Secretary of State and the relevant interested bodies will be subject to the Freedom of Information Act 2000.
Mr. Swire: I see that the bodies specifically listed are the Health and Safety Executive, the Environment Agency and the Department of the Environment for Northern Ireland. Coming back to devolution, what powers, if any, will the clause give to the Secretary of State in relation to installations in Scotland, which would affect us if something were to go wrong? What is the flow of information and responsibility between the Secretary of State and the devolved Administration in Edinburgh?
6.15 pm
Malcolm Wicks: Obviously, this is about new nuclear. The powers in the Bill will not affect Scotland, largely because the Scottish Executive, who are the planning authority for power stations of this kind, have made it clear that, at present, on planning grounds, they will not allow new nuclear to be built in Scotland. I personally hope that Scotland will one day open the way to what will be an important modern industry in the 21st century, and there may come a time when these issues will need to be revisited. However, none of the key provisions in the Bill applies to Scotland
It is important that bodies corporate associated with the operator are caught within the scope of the clause, because those involved in financing and supporting such an operator are as important to the sustainability and viability of the programme as the operator’s ability to fund it. It is therefore only right that, if one of the interested bodies had information about an associated company that might have an impact on the programme, the regulator could be required to share that information with the Secretary of State. We will work with interested bodies to draw up a memorandum of understanding that will set out how the Secretary of State and individual regulators should work together not only in sharing information, but in ensuring that the process for approving, monitoring and reviewing decommissioning programmes is understood by all those involved. That will also enable operators and persons with obligations under a programme to understand what they can expect from those parties with regulatory responsibilities.
Question put and agreed to.
Clause 59 ordered to stand part of the Bill.

Clause 60

Continuity of obligations
Question proposed, That the clause stand part of the Bill.
Malcolm Wicks: This clause will ensure that an operator can be held to any obligations under a programme, even when the original operator ceases to hold a nuclear site licence in relation to the site. This approach reflects the policy on the decommissioning of oil and gas installations under the Petroleum Act 1998, whereby the Secretary of State can pursue the licensee in relation to its obligations under an abandonment programme. The operator would only be released from its obligations when given notice by the Secretary of State. The notice may release the operator from all or only specific obligations, and it may relate to all or a specific part of the site, or to all the nuclear installations on-site or to one specified in the notice. It may also be unconditional or subject to conditions.
Additionally, the original operator might well wish to sell the station to another entity that does not have the necessary financial security arrangements in place and for which, if it had applied to have a programme approved, the Secretary of State would not have granted approval or would have put certain conditions in place. Using the clause, the Secretary of State could hold the original operator to certain obligations under the programme until such time as the new operator can make provision for that security.
The clause will therefore provide an important protection to ensure that recourse to public funds is remote at all times, by ensuring that the current or previous operator meets the full decommissioning costs and its full share of waste management costs. The Secretary of State’s powers to approve a programme submitted by a new operator will enable the Secretary of State to distribute responsibility for such action between the old and the new operator, as he considers appropriate.
We have underlined in the draft guidance the importance of the operator informing the Secretary of State of an impending change to the identity of the licensee—through a merger or acquisition, for example. However, the fact that consent will be needed to release the operator, in line with the clause, should encourage the relevant persons to inform the Secretary of State of the change as early as possible.
There is an argument that the clause could engage with article 1 of the first protocol of the European convention on human rights, which deals with the protection of property: although the licence, not ownership, can pass from one operator to another, the Secretary of State could, by using the clause, require the original operator to continue to make further payment to the fund. However, the Government do not believe that the clause engages with article 1. It is perfectly acceptable that such payment should be made, and that can be justified, because it is the Government’s stated policy that operators should be responsible for the decommissioning and clean-up of the station and that such payments should not come from public funds. Alternatively, it is a control-of-use provision.
Charles Hendry: I am grateful to the Minister for his preamble in setting out the way that the clause will work and the matters to which it refers.
Clearly, we want to be sure that, if a nuclear installation changes ownership, people cannot simply walk away from their responsibilities. However, how would the process of transferring those responsibilities to the new owner work? How would the Government ensure that a new company, which could be foreign-based, would take on the responsibilities of the previous owner? Simply by saying that they would not release the former owner from its duties, would the Government expect it to sort them out with the new company, or would the Government have a more direct involvement in that process?
Would the Government have powers to block sales outside the competition rules for people whom they felt that they could not hold to the same duties and responsibilities? For example, they could be companies outside the jurisdiction of the United Kingdom, where they could not be held to account in the same way as the companies that had initially sought the responsibilities and initially had the duties put on them. What would happen in those circumstances?
We have also seen that, over time, some companies simply fade away. Not a single company currently in the FTSE 100 was in it 100 years ago; every one is different. Some companies demerge, are closed down or are bought by foreign companies. In those circumstances, how do the Government intend to ensure that the obligations on a current owner are transferred effectively to someone else?
Specifically on demergers, if a conglomerate that owns the nuclear plant at the outset demerges into a number of smaller parts, what happens to the duty? The Secretary of State could not impose a duty on, for example, a French company that had fragmented or simply to decide which element of that French company should bear the responsibilities. I am interested to know how that responsibility would be enforced.
Malcolm Wicks: That is an important line of questioning, and I hope that I more than touched on some of it in my opening speech.
Operators will be released at the discretion of the Secretary of State. That essentially means that he may or may not release them. He is likely to release them when he is confident that the liabilities can be met by another organisation. If he is not confident about that, they will not be released.
The Government must be notified in good time before a change in ownership or control of the station. The Secretary of State must approve the revisions to the funded decommissioning programme. The Secretary of State would not expect to release the former owner or controller from their obligations unless and until satisfied that the arrangements under the new owner or controller are adequate. Breaching the obligation to notify the Secretary of State of the change or to submit the relevant parts of the funded decommissioning programme for approval will amount to a criminal offence.
Although the hon. Member for Northavon and myself must not keep drawing comparisons with pensions, it strikes me that there is an interesting comparison to be drawn in this matter. The Pensions Act 2004, which he and I discussed a few years ago, set up the pension regulator and the Pension Protection Fund, and it is interesting that pension liabilities are now, properly, part of the equation in company takeovers and possible mergers. One can well imagine that, when a company seeks to take over another company, nuclear liabilities will be on the balance sheet in the negotiations and in the discussion. That is perfectly proper.
Question put and agreed to.
Clause 60 ordered to stand part of the Bill.
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