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Earl Ferrers: My Lords, I do not like to interrupt the noble Lord, but it is difficult to hear him. I do not know whether that is because the loudspeaker system has gone funny or the noble Lord is not near a microphone. All of a sudden his voice has gone to such a degree that it is difficult to hear. Perhaps he would be good enough to speak a little louder.

Lord Ezra: My Lords, perhaps I should advance nearer the microphone. That is better.

A noble Lord: Start again!

Lord Ezra: My Lords, start again? Goodness me. I shall leave noble Lords to read what I said in Hansard. I was coming to the nitty gritty. The rest was introduction.

We on these Benches regard the nature of ownership of an enterprise to be a matter to be decided on the merits of the case. Whether an enterprise should be publicly or privately owned should be decided on the basis of whether it can do better under one form of ownership or another. In view of the fact that AEA Technology is doing so well under public ownership and, according to its chief executive, has such good prospects, I must join with the noble Lord, Lord Peston, in asking the noble Earl, when he speaks later, to indicate more clearly what additional merits he thinks will arise from private ownership. We are entitled to know. Does he believe that turnover will increase more rapidly and profits will rise more rapidly than suggested by the chief executive? We are entitled to know before we make up our minds whether we think this is a desirable proposition.

Secondly, there is the question of timing. This is turning out to be a very good investment, producing £10 million on a turnover of £250 million. In three years' time we could be earning a good deal more than that, with a much higher turnover. If this were an enterprise owned by the noble Earl, I am sure that he would be thinking about whether he should sell now or later. If he could make

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much more money later, he might well decide to sell later. Why should he forgo that extra benefit? As a member of the public, as well as a Member of this House, I am interested in his answer. If we can make much more money later, why should we not make it later and hold on to an investment which already pays us well?

The third issue that I should like to raise is one, again, that the noble Lord, Lord Peston, mentioned. It is the way in which AEA Technology is to be privatised. I was glad to learn that on the whole the Government favour privatising AEA Technology as a single enterprise, but they have kept their options wide open. The Bill provides for the business to be sold in whole or in part; for the sale to be carried out by the authority or by the Secretary of State; for there to be more than one transfer on more than one date; and for the sale to be either by flotation or by one or more trade sales. One could hardly have more options. The Government are leaving the whole matter wide open.

In my experience, no other privatisation measure has retained such wide options. Previous privatisations have all indicated broadly the lines on which the Government wished to proceed. There was a great deal of probing in the other place during the Second Reading of the Bill, but above all during the Committee and Report stages, to find out what the Government were going to do. Indeed, one of their own supporters, Mr. Robert Jackson, suggested that even if the Government would not accept an amendment to the Bill to indicate what they intended to do, when they had made up their minds they should come back to Parliament to enable Parliament to decide whether their proposals were desirable. However, that suggestion was thrown out.

I cannot understand why the Government are so reticent. I can only believe that they are reticent because the BZW report, to which the noble Lord, Lord Peston, referred said that in BZW's opinion selling AEA Technology in bits and pieces would be more profitable than selling it as a whole, although the report concluded that the Government should keep its options open.

We have to know from the Government what their priorities are in relation to this sale. Are they really seeking merely to make the maximum short-term benefit? If that is the case, they would strip the assets and sell them where they could get the most for them, but enterprise as a whole would disappear into oblivion. AEA Technology would no longer exist, having established itself in a prime international position. On the other hand, if the Government place more emphasis on continuing this enterprise along the path on which it has started so successfully with the present management, they ought to tell us so. To leave the matter wide open with such a range of options is not at all satisfactory.

One of the unsatisfactory aspects is that, so long as the uncertainty remains, the enterprise will find difficulty in obtaining new contracts. Its intending customers will naturally say, "Are you going to remain in being or aren't you? Which bits will be sold off and when? And what will happen to my contract if I enter into it if the body with which I have contracted no longer exists?". I understand

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from discussions that I have had with management that the organisation is already suffering from that uncertainty.

There is another reason for believing that the Government should make up their mind and, one hopes, tell us that they want to sell AEA Technology as a single entity. That reason is that AEA Technology undertakes certain activities in which it has achieved considerable eminence. There is, for example, the work it does on energy research, which is a subject in which I have considerable interest. A body known as ETSU, the Energy Technology Support Unit, was set up in the early 1970s to carry out research on energy subjects. It has established an enviable reputation of independence and effectiveness in that field. If that body were to be sold off separately and merged in some wider commercial consultancy organisation, that reputation would disappear. The credibility which ETSU has with its present customers would cease.

I am in the energy consultancy business. I declare that interest. We frequently turn to ETSU, not as competitors, but as a body which can provide us with useful research to enable us to carry on with our activities. That factor would disappear. If ETSU were swallowed up by a competitive consultancy enterprise, we would not dream of turning to it; and the independent energy efficiency information which it provides—it deals with industrial energy efficiency, renewal energy and waste technologies—would no longer have that significance.

There is a another aspect of the sale about which the Government ought to tell us their intentions. One choice among the various options which the Government have reserved for themselves is whether there would be a trade sale in whole or in part, or a flotation. Quite frankly, I would be opposed to a trade sale because the organisation, in whole or in part, would be swallowed up in some other existing body. The significance of having AEA Technology as an ongoing, separate organisation would be lost. I should like to hear the Government express their preference that AEA Technology should continue as an ongoing organisation. They should tell us why it should be sold now rather than later; and indeed why it could do better in the private sector; and state whether there would be a trade sale or a flotation.

Perhaps I may remind the noble Earl that when Amersham International was floated—it was hived off from AEA some years ago—for the manufacture of isotopes, it was several times oversubscribed. If the Government undertake a trade sale, how can we ascertain that they will obtain the best price? I believe that we can be more assured that we are getting a reasonable price if there is a flotation. I very much hope that the noble Earl will give us answers to these questions when he replies to the debate.

11.52 a.m.

Lord Sherfield: My Lords, I rise to say a few words in support of this Bill. It is, of course, a privatisation Bill. I have never been in favour of the principle of privatisation across the board; I believe that the circumstances of each case should prevail. I consider that this measure is a particularly good case.

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I have been following the progress of the enterprise for some time in view of my past association with the Atomic Energy Authority. Its record to date is very impressive, as has already been said. In many ways, the enterprise is unique because of the multiplicity and diversity of skills on which it can call, which enable it to deal successfully with complex contracts. It is important that that success should be allowed to continue.

The enterprise has been very successful under the present management which has built up a successful export business of great benefit to the balance of payments. That is one of the important reasons that it is essential for the enterprise to be sold as a whole. The possibility of drawing on this resource of engineering and scientific skills gives it what I believe is called synergy of a high order, which enables it to land and execute complex international contracts.

There is another important reason for ensuring that the enterprise is sold as a whole and not broken up into sections. I refer to the staff. As I understand it, they feel that it is of great importance to them that it should remain as a single unit. That aspect has been emphasised already in the debate. However, it would be helpful if the Minister will give a little more reassurance that the enterprise will remain as it is, enabling it to continue its present policy.

As has been said, one of the great strengths of AEA Technology is the quality of its people. It is important that whatever form the privatisation takes, those people should be encouraged and motivated in every possible way. In particular, they should be enabled to participate in the profitability of the company. For those and many other reasons it is essential that the enterprise should be sold as a whole and not broken up. That is the main point on which I wish to concentrate.

Perhaps I may add that the present management has proven itself; and in view of the complexity of a great many of its contracts, it should have the greatest flexibility in operation. That is one of the reasons why it is right that it should be passed into the private sector. The management should have full capacity to act without legislative or other restrictions upon it.

As the noble Lord, Lord Peston, said, there are a number of points to be discussed in Committee. However, with those few words I express the hope that in the end the House will give this measure a fair wind.


Lord Boyd-Carpenter: My Lords, it is a good example of the odd way in which the Business of your Lordships' House is being arranged at present that we are taking this most important Bill on a Friday morning. The importance, significance, long-term effects and difficulties are probably greater than with any measures which we have spent the earlier part of the week discussing. I hope that it will not be regarded as a good precedent for taking major, complex and important legislation on a Friday morning. I hope that those who arrange our business—if they do arrange it—will manage better in future. In the circumstances, all one can do is to ask a number of questions. My noble friend on the Front Bench always answers questions fully, even if he does not always give the answers for which one had hoped.

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First, will my noble friend answer the question put by the noble Lord, Lord Peston? What is the total value of the property which is to be transferred as a result of the provisions of the Bill? I appreciate that he may not be able to give a precise figure, but perhaps he could give the order of magnitude of the value of the property which is being transferred.

As a former Treasury Minister, I observe with some amusement that the Bill is solid and full of provisions requiring the consent of the Treasury for almost anything that is done. I know that in many measures that is the effect of a Bill, but I cannot recall seeing any legislation in which the necessity for Treasury agreement is spelt out so frequently and fully. The Bill includes the fascinating provision of Clause 10(10):

    "The Secretary of State shall not exercise any power conferred on him by this section except with the consent of the Treasury".

I do not think I have seen that spelt out so brutally in former legislation, although I accept that it is probably part of the effect. Noble Lords will see that throughout the Bill provisions that the Secretary of State will operate with the consent of the Treasury are explicit in practically every paragraph. The powers of the Secretary of State are undoubtedly fairly limited.

There are one or two small points with which perhaps my noble friend will deal when he comes to reply. Can he say why the number of members of the authority is to be reduced? I appreciate that some of their functions are being taken away, but that membership is still an important function. A good variety of experience is required in running the authority. I wonder whether reducing the number of members to four may not unduly narrow the general levels of experience and expertise which it would be useful to have on the authority.

Another quite small point is that I would be interested to know why in Clause 8 stamp duty is to be removed from certain transactions. In general, I am all in favour of removal of all kinds of taxes from all sorts of activities, but it seems odd to spell out that stamp duty is to be excluded from an area in which apparently it was previously imposed. It calls for explanation in due course.

I believe that I heard it said that the number of employees directly affected by the Bill is of the order of 4,000. But I should be grateful if my noble friend would spell out what the numbers are and broadly what categories of work they are engaged in. Even to transfer 4,000 employees—which is a comparatively limited number—is a substantial matter and of great importance and significance to them. It would be helpful if my noble friend could say whether that is the right figure. If so, will he give some breakdown of the types of work, professional skills and expertise which they represent?

As has been said more than once, the Bill will have to be considered in Committee in some detail. There are a number of points, several of which were raised by the noble Lord, Lord Peston, and which I will not repeat because I know that my noble friend made a note of them. I hope that he will realise that it is not only the noble Lord, Lord Peston, who wants an answer; many of us in your Lordships' House hope that the questions will be answered.

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As I began by saying, this is an important Bill. The activities it covers are of great significance for the future. They require careful management. I start with the presumption that a move towards privatisation is right. I know that noble Lords opposite do not share that view, most of them take the diametrically opposite view. I accept that the case for privatisation always requires to be made, there may well be exceptions to the general principle that a move to privatisation is a good thing.

When my noble friend comes to speak, and later on at the Committee stage, I hope that he will explain why at this moment it is desirable to introduce such a degree of privatisation. That area of work is of a complex nature; comparatively few people in this country fully understand it, even now. Therefore, there may be special circumstances which would raise a doubt as to whether the generally good principle of privatisation should apply. I express no view on it, I merely say that it is up to the Government to establish that both the act of privatisation and its timing are right. My noble friend always replies effectively, and I have no doubt that he will have answers to the questions. I hope he will give them.

12.8 p.m.

Lord Haskel: My Lords, as we have been told, this Bill is designed to privatise AEA Technology. AEA Technology is probably the most important contract technical research and consultancy organisation in the country. The Minister described its scope. It is an important asset and we must be very careful with it. It is therefore extraordinary that the Bill is so unpopular. It is unpopular with small and medium-sized technology companies because they find it impossible to get the same high quality advice elsewhere at reasonable cost. The Minister, who is also responsible for small companies, must know that other large contract laboratories just will not deal with small companies.

The Bill is unpopular with the 4,000 staff who are worried about their pensions and career prospects. My noble friend Lord Peston told us that the Bill is unpopular with Parliament because it is a paving measure which allows AEA management or the Secretary of State to set up a company or companies that can be sold off without further effective parliamentary scrutiny. It is unpopular with the public because they are worried about the effects of the privatisation on nuclear proliferation and safety. The sale is certainly not in the taxpayers' interests, because it does not make business sense. It is unpopular with the science community because splitting it up works to the disadvantage of the British science base. So far as I can tell, this privatisation is popular with the Government only because they need something to privatise, and popular with the City and consultants because of the resulting commissions and fees.

I shall examine the reasons for this unpopularity in a little more detail. First, why is this privatisation unpopular with business? Business looks at AEA Technology as an important source of technological development and consultancy. Because it is in the DTI, businessmen know that AEA Technology will deal with anybody, large or small, at reasonable cost. It is looked upon as a national

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resource. Because of the government connection, it has attracted other large technological projects to this country, such as the European Taurus laboratory, which is funded by the European Union and is located near Harwell largely because it has to be near AEA Technology.

The sale is also unpopular with business, because of the knowledge that businesses such as AEA Technology are best retained for their licence and consultancy income, and are best not sold. AEA Technology is a "people" business; and people businesses attract a very low price, for the reasons suggested by my noble friend Lord Peston. The Government will receive an even lower price for this business because the City simply does not understand contract technology research and consultancy and puts a very low value on it. Businesses like this are sold only in desperation. Another worry must be that somebody will buy the business and move all or part of it abroad. Can the Minister give any guarantees that that will not happen?

The Bill is unpopular with the staff since not only does it upset and diminish their career prospects—which even the Minister must agree is an important aspect of a people business—but also because there is uncertainty about pensions. At present, the Bill prevents employees' existing pension rights being transferred to the private sector. That is manifestly unfair. Pension rights are not guaranteed in the Bill. All we have been given are vague assurances about there being "no less favourable" rights. Perhaps the Minister can give us further enlightenment on this. The pension fund has been successfully managed for over 40 years and provides full index linking for members. Indeed, from time to time the fund has been in surplus. Once a business changes hands it is extremely difficult for the previous owner to exert any long-term control over the development of its pension fund. Therefore, it is important that employees should receive proper undertakings now.

The Bill is unpopular with Parliament because it gives the Secretary of State powers to reorganise and transfer parts of the business without further reference to Parliament. Is that because the Minister is prepared to leave it to the market to sort everything out? The United Kingdom Atomic Energy Authority and AEA Technology are an important national resource. Parliament needs to debate how it will be split up; how the safe dismantling of nuclear power stations is to be carried out; and how safety standards will be maintained. It needs to consider how AEA Technology is to be split up and sold. Is it to be a trade sale or a management-employee buy-out? Is it to be split up with important parts being closed down or going abroad? The Minister says that this depends on the performance over the next few months. The long-term national interest needs to be considered in regard to such an important national asset. This matter cannot simply be left to the sole discretion of the Secretary of State. Parliament must have further scrutiny.

The Bill will be unpopular with the public because the taxpayer will get a poor deal. As I explained earlier, people businesses realise low prices. So it is far better to keep them and benefit from the future income from royalties and patents. The noble Lord, Lord Ezra, told us that the business is doing well and that its profitability is increasing. I understand that it is establishing itself in

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eastern Europe to provide assistance in decommissioning and cleaning up nuclear power stations there. I happen to know that AEA Technology recently set up the National Centre for Tribology, which now has an income of some £3 million for solving problems concerned with friction, lubrication and wear. I join the noble Lord, Lord Ezra, in asking the Minister why he plans to sell the business now, when he could get far more for it later. Even so, it will be a poor deal for the taxpayer. By the time the Government have made contingent liabilities for the pension fund and made the write-offs about which the Minister told us, the Government may find themselves making no money at all from the sale.

The interests of the scientific community have certainly not been taken into consideration. The Office of Science and Technology's Technology Foresight Report, published a few weeks ago, strongly recommends that the expertise of companies such as AEA Technology should be supported and enhanced. Yet this Bill will lead to the opposite. Does the DTI talk to the Office of Science and Technology? Perhaps the Minister can tell us.

Therefore, not only does this privatisation make no economic sense; it makes no sense in terms of Britain's science base. Science is a long-term business and, in the DTI, AEA Technology can take a long-term view. In preparing the company for privatisation the City will take the usual short-term view that it takes with all technology companies. When the consultants were asked to look at the privatisation the interests of the British science base were not even mentioned in the terms of reference.

The worst thing that could happen to British science is that the company should be broken up and its fragmentation lead to a form of cherry picking that will undermine its activity. That would be to the detriment of our science and technology base, and contrary to the advice of the Office of Science and Technology—and all this for very little money. What a shambles!

The Minister says that the development of the company can take place only in the private sector, and he makes comparisons with other privatisations. This privatisation is unquestionably an exception and ought to be looked at much more carefully. One of the advantages of AEA Technology is that it is in the public sector, and that is why it has been so successful. It helps the private sector. Like the noble Lord, Lord Ezra, I cannot think of any private sector expertise which will help AEA Technology. It is a successful, integrated, well-respected and well-managed international business.

The Minister's words about privatisation being the best way forward and about freedom in the private sector is the language of the 1980s. The industrial world has moved on since then. Today the search is for world-class centres of excellence. Those are what make an economy strong and healthy. Ownership is irrelevant. Public and private should be in partnership, not in competition. AEA Technology is one such world-class company. What is more, it plays a crucial part in helping Britain create more world-class companies. Privatising it is not only selling off the family silver; it is destroying the source that creates the family silver. Lord Stockton must be turning in his grave.

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12.19 p.m.

Lord Flowers: My Lords, with one misgiving, which I shall address presently, I support the Bill. Perhaps your Lordships will permit me to say that my adult life began in atomic energy, first in Canada during the war, then in Harwell, which in those days was the research establishment of the whole British enterprise. Under the inspiring leadership of Sir John Cockcroft, it soon became a major centre of broadly based research which could hold its head up against international competition, especially from America. I have remained more or less close to the nuclear industry ever since, although not always on its side on every issue, as the House may be aware. But nowadays our relationship is entirely informal.

I am aware that my historical perspective as an insider, so to speak, may differ a little from that of the noble Earl. But in those early days a great deal of basic research was needed on nuclear physics, on the properties of materials exposed to intense radiation, on the chemistry of new elements such as plutonium and on the behaviour of the various possible nuclear reactor types. As time went on and those issues became clearer, more work was done on more practical problems: on separation technologies, for example; on the disposal of nuclear wastes; and on environmental and safety problems. Of course, much of the work was done at the other sites of what was by then the Atomic Energy Authority.

During the 1970s it became generally understood that the AEA, especially, but not only, at Harwell, had developed many powerful techniques absolutely necessary for the extreme conditions found in nuclear plants which, however, could also be applied to great advantage to other types of plants outside the nuclear industry. The noble Lord, Lord Marshall of Goring, spearheaded those developments when he was director of Harwell.

Three major themes in particular have emerged. Safety analysis and techniques originally developed for nuclear installations have since been successfully applied to the rail, air and water industries among others. Environmental discharge control, first introduced for nuclear discharges, is now being applied to the control of hazardous materials more generally. In the course of that work an expertise has grown up in the operation of chemical plant as a result of which non-nuclear operators have been helped to optimise their plants, especially in the light of arduous safety and environmental factors. In the nuclear field itself, a great deal of work has been done on the decommissioning of nuclear plant, of which we hear much nowadays; it has already been mentioned today in your Lordships' House.

In recent years, that type of activity has been concentrated into the division of the Atomic Energy Authority called AEA Technology. As the noble Earl explained, it is no longer primarily a research and development organisation (although still perfectly capable of performing R&D) and it is not really part of the country's science base any longer. It is best described as a science and engineering-based company offering consultancy and technical services to a broad range of industrial customers at home and abroad. It acts, for instance, as consultants to the Ukraine and Slovakia on the decommissioning of old nuclear power stations,

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which was referred to by the noble Lord, Lord Haskel. What we have witnessed is the birth and sturdy growth of a new type of high technology industry of great importance and promise.

As we have heard, the Bill makes it possible to separate off the activities of AEA Technology from the rest of the AEA. The privatised company will continue to have the nuclear industry among its chief customers. Already, however, almost half the revenues of AEA Technology derive from its non-nuclear activities. Shed of the restrictions necessarily placed on it by the AEA—a major point which, in part, answers the question of the noble Lord, Lord Ezra —the non-nuclear proportion is likely to increase and its export earnings, it is hoped, will reach about a third of the total. There is no doubt in my mind, although such is my continuing affection for Harwell that it is with some sorrow that I say it, that the prospects of the company will be enhanced in the private sector.

Coming to the Bill itself, there is a clause without which I should strongly oppose the whole venture. Clause 1(3) retains in the hands of the AEA and therefore in the hands of Government the ownership of nuclear sites and the licence to operate them, subject to the provisions of the Nuclear Installations Act 1965. Given that clause, I do not consider that there are any valid health and safety or environmental objections to the proposed transfer to the private sector.

However, the form of the Bill arouses in me one misgiving, as I remarked at the beginning of my speech. I am glad to see that it is shared by other noble Lords. The Bill enables the Secretary of State, if he thinks fit—and he may well do so—to split up AEA Technology into a number of distinct companies. Perhaps they would each specialise in one aspect or other of the available business; perhaps they would be forced to compete with each other across the board. Either way I believe that it would be a great mistake.

As I have taken some pains to explain, the various skills of AEA Technology have grown from a single beginning and form a coherent and mutually supportive whole. I do not say that it should stay that way for ever. I am content to let market forces determine the longer term outcome. But I personally consider that it would greatly weaken the enterprise and its chances of success, which are at present good, if it were to be split up by ministerial fiat before it had found its own level of operation in the market place.

I agree that many points of detail remain to be resolved in Committee. But, with that one misgiving, of which the Minister has not quite rid me, despite his careful and courteous explanations, I am happy to support the Bill.

12.27 p.m.

Lord Wade of Chorlton: My Lords, I welcome the Bill. It offers an opportunity to that company and may bring great strength to the industry of the UK generally. Many noble Lords have explained in detail the enormous efficiency, competence and range of abilities that now exist in AEA Technology. The Bill presents that body with the opportunity to become a private company, free, as the noble Lord, Lord Flowers, said, from the controls that might be contained in its present structure and free of

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the involvement of government. It will have the opportunity to employ a very highly motivated workforce which can encourage the development of its technology and skills on a world-wide basis.

There is now, with the enormous development of technological opportunity, a great need for a world-wide company with a wide range of skills which can help in a structured and defined way to co-ordinate some of the wide range of activities that are now taking place. As the noble Lord, Lord Ezra, said, in recent years there has been a change in management which has brought a great deal of business expertise into the organisation which will enable it to be much more forward-looking.

I strongly believe that the Bill gives us the opportunity to create a single, unitary, large-scale business, I would hope with its employees having a share of ownership in the business to encourage their long-term commitment to the organisation. That would put British industry, and the technology that will back it up, on a world-wide basis and help bring a whole sector of British industry right on to the world scale.

Having said that that is the opportunity presented by the Bill, I am concerned that in fact the Bill does not emphasise that opportunity but rather stresses a range of possible things that the Government may decide to do. I am delighted that all the noble Lords who have spoken have said that if this measure is implemented, it should result in a unitary body—that is, apart from the noble Lord, Lord Haskel, who does not want it to happen at all. I hope that we take this opportunity to create a strong, single company.

I hope that, with that in mind, the Government will look closely at what they bring forward at the next stage. A number of noble Lords will be pressing for such a solution. They will seek a clearer definition of the company that they want and a clearer explanation of why they want it at all.

I hope that the Government want to use their decision to privatise—with which I am entirely in favour—to create something that is better than exists at the moment; that removes restrictions; gives the opportunity to grow, to raise more finance and encourage a longer-term commitment to the business. If that is their purpose, then I applaud it wholeheartedly, and I hope that the Government have the guts to say that that is what they want to do. On the other hand, if they want to raise short-term money by selling something, then they should make that clear because it would not receive the same support, either in this House or elsewhere.

I see a great opportunity for a new privatised AEA to be more involved in the exploitation of the research taking place in our universities. As I have said in this House before, in Britain there is a lack of the skills needed to exploit research opportunities and take them into the commercial world in a more effective way than many small organisations which operate in this field do at the present time. If AEA is properly structured and we have the right management with those ambitions in mind, it will play an important role in encouraging the exploitation of the excellent research which takes place in our universities and research establishments.

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I agree wholeheartedly with noble Lords who support the Bill and with those who feel that the Government need to be clearer in relation to what they want to do with it. It is inevitable that these matters will be pressed at the Committee stage. I know that my noble friend will be only too anxious, as he always is, to help us and find solutions to the problems so that we can give support to the Bill. However, I disagree with noble Lords who say that privatisation is not enormously successful. There is not a company in Britain that, having been taken out of the public sector, has not succeeded as a result; has not provided a better service to the customer; has not given a better return on finance and has not given a better return to investors at every level. I am positive that AEA Technology can offer the same benefits if presented as a whole unified company, and if given the opportunity to expand and grow and fulfil its ambitions on a world scale.

12.32 p.m.

Lord Clinton-Davis: My Lords, this has been an interesting debate and one which has caused some anxieties to be expressed regarding the way in which the Bill is drafted—those anxieties not being confined to this side of the House. I shall return to that topic later. We take the view that this is not only an unnecessary Bill, but it is also undesirable. It is ideologically driven and no compelling case has been made for it. The noble Earl finds that amusing. But his Government are ideologically driven and they are being driven into the sands pretty rapidly.

The Bill may be seen as being a fairly logical consequence of the Government's failure to privatise the Post Office. They have to privatise something and they seized on this. Having failed to privatise the Post Office, they have made life extremely difficult for it, notwithstanding the fairly paltry attempts that were made recently to mitigate some of the problems. This is the logical consequence of that failure.

At the beginning of his remarks the noble Earl said that his explanation was a "nutshell" of the Government's proposals. I suppose that that is an appropriate word to use because nutty ideas have got to have nutshells! But this is not a sensible proposition. It is a reflection of the Government's belief—which I believe to be misbegotten—that somehow or other, regardless of the success that can be depicted in a publicly-owned industry, it must be privatised; that the market will resolve all the problems and that in this case the Government can safely ignore the great story of success which they themselves indicated both in another place and here today. They have conceded that the industry has been supremely successful not only nationally, but also internationally. I believe that the 4,000 employees of AEA Technology are entitled to be congratulated on the efforts they have made, which have brought such rewards not only for their company but also for their country. AEA Technology is a critical element of the ability of Britain to succeed in its research and development ventures.

When my noble friend Lord Peston opened the debate for the Opposition he posed a number of serious points, to which I hope the Minister will respond, and one of which my noble friend Lord Haskel reiterated. They pointed out that these proposals will have the effect of losing the synergy of the component parts of AEA Technology. That

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is part of the success of this enterprise. We believe that any possibility of fragmenting this enterprise, and to do so without being specific in law, is extremely damaging. I suspect that it will be fragmented; the best bits will be disposed of and a cherry-picking venture will be undertaken. That will be bad for Britain and also for the Government. The whole enterprise is another nail in their coffin.

At the beginning of the debate my noble friend Lord Peston —he was joined in this by the noble Lord, Lord Boyd-Carpenter—said he found offensive the way in which proper scrutiny by Parliament of the further progress of this madcap idea is to be undertaken. Is there to be any proper scrutiny? The answer clearly is no. It is wrong that the Government should bring forward measures of this kind. My noble friend asked a question and it is extremely important that it should be answered by the noble Earl: are there any procedures in this House to debate these further processes? I am not talking about a Wednesday debate or some form of Unstarred Question debate. We need the Minister to respond to that point and if the answer is no, as I suspect it will be, then this Bill is thoroughly unsafe and wrong. It is not the first time that the Government will have gone down this route.

This sell-off is effectively giving the Government a blank cheque. Of all people, this Government should not receive blank cheques. The Bill was introduced when it came before another place before any indication had been made of the Government's nuclear review. It is wrong that the House of Commons should be denied the opportunity to view the Bill in the context of that review. After all, that review has been promised since October 1989.

I turn now to the future role of UKAEA Government Division especially in areas of profitable commercial activities. The Minister has not discharged that duty, though if I misunderstood what he said I shall certainly look carefully at Hansard when it is published and we are able to examine the matter. However, grave issues have arisen in regard to pensions and my noble friend pointed to them and promised rightly that we shall return to them at Committee stage in order to obtain the clarification that is obviously needed.

There is too much uncertainty about the Government's intentions in this regard. The term used in the Bill is that pension rights should be "no less favourable". It is an inability so far to define with precision what that term means that has led to considerable concern on the part of the employees. The terms "no less favourable" and "broadly comparable" have created great difficulties already in relation to the construction that has been placed on them by the Government Actuary's Department. The Institution of Professionals, Managers and Specialists has referred to the recent disposal,

    "of two groups of employees to the private sector by sale. These are Facilities Services Division with 950 employees to Procord Limited and Harwell Dosimeters with 7 employees to EMS Medical Limited. Employees in both groups were not allowed to remain in the UKAEA index linked pension schemes. Neither of the new schemes on offer from the new employers offered full index linking but both had been given the Government Actuary's Department certificate of 'broad comparability'".

That seems extraordinary. Thereafter the union sought independent actuarial advice which concluded that the scheme offered in the Dosimeters' proposal is not broadly

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comparable. Yet the Government Actuary's Department certificate said that it was. There is a clear concern on the part of the employees, whether within unions or outside, about this matter. I ask the Government to examine it, as they will be forced to do anyway in Committee. We are not satisfied with what is proposed.

The Government's record in this respect has been less than satisfactory. A number of noble Lords will remember the difficulties that were experienced in relation to the Railways Bill. Because of the concerns expressed by employees, the noble Lords, Lord Peyton and Lord Marsh, together with noble Lords on this side of the House, were able to persuade the Government to change the provisions of the Bill. Some considerable progress, I must concede, was made as a result of that pressure. We do not believe that the criteria to be used by the Secretary of State in judging the terms "no less favourable" or "broadly comparable" are satisfactorily provided for in the Bill. They should be there but they are not.

My noble friend Lord Haskel also raised that point. I should like to add to what he said by asking another question. Why are the Government not persuaded in this regard to do what they did in the case of Amersham International, which was to give employees the opportunity to elect to remain within the Civil Service pension scheme until they chose as individuals to move out of the scheme altogether? After that case the Treasury demanded a change. Again, in this case, it is the Treasury that has determined the actions which the Government should be taking in relation to pensions. That adds force to the remarks that were made by the noble Lord, Lord Boyd-Carpenter, about the extraordinary force of the Treasury on this department in the Bill. I believe that there ought to be independent scrutiny of the whole matter. Employees have also expressed to us their great concern about the conditions of employment that are likely to be offered. That uncertainty also requires to be dispelled if the Government are to go ahead with this idea.

The Government say that AEA Technology has been impaired in its development by the application of the Treasury rules despite the extraordinary success that it has actually had. Perhaps the best answer to that would be not to interfere with AEA Technology but to do something about the Treasury rules, which are certainly in need of re-examination and which are impairing the activities of a great number of enterprises—perhaps more than in the case of AEA Technology. The Opposition are re-examining the situation and I hope that the Government will say that that is a perfectly proper thing to do.

I agree with my noble friends Lord Peston and Lord Haskel that the Government are being careless about the national interest. This agency has proved its ability in the field of research and development. That situation will change. It will pass out responsible control and the nation will lose control of the strategic direction of this prized national asset. My noble friend Lord Peston asked whether some provision should be made to ensure that that situation is defended. The Minister must answer that question in his response.

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The objectivity and independence of the agency are also at risk. Those qualities have been the hallmark of its approach. I fear that there is a real risk that the agency's objectivity and independence will be impaired as a result of these proposals.

Perhaps I may say a few words about the idea of a management buy-out. In the Railways Bill, although I was never quite sure as to whether it was wholly in conformity with the competition rules of the Treaty of Rome, the Government said that they were going to give preference to a management buy-out when bids for franchises were being considered. There is no provision for that in this Bill. Why not? If the Government are satisfied that their approach in relation to the Railways Bill was licit, why are they now not including in this Bill a provision to that effect?

Under Clause 3 the management is empowered by the Bill to do anything it deems fit to facilitate privatisation. What does that mean? Can it go about doing what so much of management of privatised industries has been doing recently—offering themselves larger salaries, share options, declaring redundancies in advance; all the great notions of success entertained by the noble Lord, Lord Wade?

In Clause 10 the qualifications for board membership are to be removed. Why? The Government have not explained this matter. There are certain qualities affecting the board members which were set out in the Atomic Energy Authority Act 1954. I shall not weary the House with those today but those were set out and defined in that Act. They are now to disappear. Why? The Minister also dealt with the question of privatisation and the write-off of debt. Why are the Government pursuing a different policy in this regard from what they have in relation to other privatisations?

A number of your Lordships from all sides of the House have raised highly salient points. Even some noble Lords who have supported this idea have also questioned the propriety of the way in which the Government are going about this Bill. These are very significant matters. I fear that even at the Committee stage we shall run into great obstacles about being able to obtain from the Government assurances affecting employees and affecting the nation as a whole. I do not believe that the people of this country want this form of legislation. I think that they are deeply concerned about it. The Government are ensuring once again—I suppose this is the happy part of the Bill—that they will lose the confidence of the people massively in at least two years' time.

12.50 p.m.

Earl Ferrers: My Lords, we have had an interesting debate, as I thought we would. It has stimulated a number of noble Lords to say a number of interesting things. The noble Lord, Lord Peston, ended his speech in a charming way, having put about 150 questions, saying that he realised that he was trying to be helpful. He is very interested in this subject. In this brief debate he referred to the fact that his speech was a good deal longer than mine. That is an irrelevance and I make no complaint about that. Indeed, it was three minutes longer and I call that a long time. I make no complaint about that, but simply draw attention to it.

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What really wounded me about the noble Lord's speech—normally he does not wound me at all—is that he said I had used every cliché from the Department of Trade and Industry. The fact is that I hate clichés. I have spent all my life removing them. The fact that he thought that I had used them all was a source of great distress to me. He and his noble friend Lord Clinton-Davis rattled out all the clichés themselves. They talked about the dying embers of the Government. The noble Lord, Lord Clinton-Davis, said that we were sinking into the sand and that we were cherry picking. He said that the Bill was ideologically driven and that it was introduced because we could not privatise the Post Office. That is the most astonishing argument. The worst cliché of the whole lot came from the noble Lord, Lord Peston, when he referred to "supra-additivity". I do not believe that even that word appears in the Department of Trade and Industry's glossary of clichés. All I can say to the noble Lord is that I suppose he must have just taken his children to see Mary Poppins and was thinking of "supercalifragilisticexpialidocious". If he had used that word I would have understood it.

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