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Lord Peston: My Lords, the noble Earl is now hurting me. The word I used is not a cliché. It may be gobbledegook, but it is a standard word from my own dear subject of economics. He can attack me on those grounds, but I do not think he should accuse me of using a cliché.
I was particularly glad that the noble Lord, Lord Flowers, who is such a distinguished scientist, said that he approves this Bill, principally because the Government Division is going to hold on to all the nuclear responsibilities. That remains, as it quite rightly should, in the public domain. Therefore, as the remainder is being privatised he found that totally acceptable. He said that there were no environmental or health reasons for objecting to that. That was very clear and proper.
My noble friend Lord Wade asked about the reasons for privatisation and hoped that it was not just for short-term commercial gains. He is quite right in that it is not short-term gain. The Government's intention in privatising AEA Technology is to realise the potential of the business and to enable it to maximise its possibilities. We are not going to sell the business or the staff short. We are not bringing this measure forward for short-term financial gain. The sale will be made on terms reflecting the national interest and to secure the best value for money for the taxpayer.
The noble Lord, Lord Peston, was concerned about the financial responsibility of the new nuclear liabilities under these long-standing arrangements. These liabilities will continue to be managed by the Government Division. For the reasons which I have given to the noble Lord, Lord Wade,and as he rightly said, there is an enormous world potential herethe fact that the nuclear side has been removed means that we are left with some really distinguished scientists. They are much better working in the private sector.
The noble Lord, Lord Haskel, said that the people did not want this measure, the Atomic Energy Authority did not want it, and nor did the taxpayer. Then the noble Lord, Lord Clinton-Davis, said that the people of this country did not want it. I found that attitude of the three noble Lords opposite most astonishing and one of burying their heads in the sand. I thought that their party had said once and for all, after about 50 years, that it disapproved of nationalisation and that it had removed Clause 4. However, each of those three noble Lords said that they wanted this industry to remain in the public sector and that the nationalised part of it was better. They said that they did not want it transferred to the private sector. The reason that industries have gone into the private sector and that the party opposite has changed its views is that once these industries have gone into the private sector the firms have done better. One has only to look at gas, electricity, the telephone system and British Airways: the whole jolly lot have done better. That is why we believe that this organisation would do better if it were in the private sector.
The noble Lord, Lord Haskel, sits nodding his head backwards and forwards as though he had St. Vitus's dance. He must look to see what has happened in the private sector because nationalised industries have worked better there. The fact is that one cannot enable these scientists to get the full benefit if they are limited by government restriction. They are bound to be restricted, provided that the industry is in the public sector because governments are not in the business of allowing money to be used on a speculative basis.
Earl Ferrers: My Lords, the noble Lord, Lord Clinton-Davis, sometimes asks the most extraordinary questions. He knows perfectly well that if a business is in the public sector, it is subject to Treasury restrictions. The reason it is so restricted is because it is not right to use public money for speculative ventures.
I am glad that the noble Lord, Lord Sherfield, made his intervention. As a previous distinguished chairman of the Atomic Energy Authority, his views are enormously respected. He was concerned that there should be unitary privatisation, as were the noble Lords, Lord Ezra and Lord Haskel. I can understand why people like unitary privatisation. It may well be the best way forward. But we cannot say definitely now that the organisation will be sold as a single entity or that the sale will take any particular form. It depends entirely on the way in which AEA Technology performs over the next few months as regards the requirements of customers and confirmation from the market that a unitary sale will secure the best overall value for money.
Lord Ezra: My Lords, the noble Earl has told us that the Government cannot yet make up their minds on the form to be taken. When they do, will there be an opportunity for us to debate it in this House?
The noble Lord, Lord Peston, inquired as to how profitable AEA Technology was. The noble Lord, Lord Ezra, very kindly answered the question for me and I shall not answer it further, save to say that the noble Lord was quite right. If he cares to answer any of the other questions which the noble Lord, Lord Peston, asked, I should be deeply grateful.
Lord Peston: My Lords, we are all being extremely helpful. I had seen the same £10 million figure. I wanted confirmation that that is the Government's estimate of profit correctly calculated on a profit and loss account basis. I take it that the noble Earl is saying that that is the right figure.
My noble friend Lord Boyd-Carpenter asked what was the total value of the property to be transferred. It is quite difficult to answer that question. It will consist basically of fixed assets, contracts in progress and intellectual property rights, which is a point about which the noble Lord, Lord Peston, also asked. It is our intention to secure the best value for money from the whole of the sale. My noble friend also asked about the net worth. It is not possible to answer that. At the moment AEA Technology does not have a separate legal identity or its own balance sheet, but the value of the business in the end depends on its performance right up to the date of the sale. My noble friend also asked about contracts. There are over 2,000 customers. Most contracts are short term but some, including contracts with the Government, run for a number of years and will form part of the sale.
The noble Lord, Lord Ezra, and the noble Lord, Lord Haskel, asked why we were going to privatise the organisation. I have tried to make clear that the Government have said on many occasions that greater commercialisation in the public sector is not an option. It is impossible to escape the fact that the Government have to stand behind any public body. Therefore, it is irresponsible to allow those companies complete commercial freedom. That would be gambling with the taxpayers' money and would be inappropriate, as I am sure noble Lords will agree.
The noble Lords, Lord Peston, Lord Ezra and Lord Flowers, referred to foreign ownership and asked whether foreigners could buy the organisation. The decision as to whom AEA Technology might be sold will depend on a wide range of criteria, including the need to maintain its reputation for independent and impartial advice, and on the form of the method of sale which will not be decided until nearer the date of the sale. The Government welcome overseas investment in this country and, provided that the potential buyer meets all the sale criteria, there is no specific reason why a buyer should be discouraged simply on the grounds of nationality. We are not talking about the Government Division which deals with the nuclear business. That is a very different matter,
Earl Ferrers: Including anything; including oil. They are giving advice as contractors. That is perfectly correct, and they will continue to do so. The AEA sells its expertise to nuclear operators overseas. It does so under strict controls, and those controls will remain in place after privatisation.
The noble Lord, Lord Peston, must have been prompted by his noble friend Lord Bruce of Donington when he asked whether there were any European Union aspects to this. The department has been in contact with the Commission which has indicated that, in principle, it does not anticipate that the Government's plans for AEA Technology will give rise to any significant state aids or competition issues.
The noble Lords, Lord Peston, Lord Haskel, and Lord Clinton-Davisfunnily enough, all three noble Lords are from the party opposite, but it sometimes happens that that party speaks with one voicewanted to know about pensions. It is not possible for the pension scheme of the privatised company to be the same as the authority's scheme. I forget which noble Lord referred to the difference between "the equivalent" and "the same" and tried to drive a coach and horses between the two words. The new scheme cannot be the same as the authority's scheme. Some features of the authority's scheme may not be reproduced in a tax-exempt occupational pension scheme. I doubt whether employees would thank your Lordships if they had to pay tax on their pension contributions and lump sums.
The noble Lords, Lord Peston and Lord Clinton-Davis, and my noble friend Lord Boyd-Carpenter referred to the board's composition, which is the subject of Clause 11. They asked why the number of people is to be reduced from seven to four. Clause 11(2) states:
The noble Lord, Lord Clinton-Davis, said that certain qualities were required from board members under the Atomic Energy Authority Act and asked why that requirement was being removed. The answer is that in those days we were very much concerned with atomic energy and nuclear energy and it was therefore thought appropriate to specify in that Act certain qualities for board members. Now, AEA Technology is different, and it is better to allow the board to draw on a wide range of expertise as opposed to being restricted to drawing its membership from certain categories only.
The noble Lords, Lord Peston, Lord Ezra, and Lord Clinton-Davis, asked about parliamentary scrutiny. The Government have to be concerned about the interests of the taxpayer and about securing the best value for money if the sale goes forward. We can do that in two ways: by getting the best available price and by privatising the
The noble Lords, Lord Sherfield and Lord Haskel, referred to employee participation. That is an issue in all privatisations. It is of particular interest in the case of AEA Technology which is, as the noble Lord, Lord Haskel, said, a "people business". Employee participation is likely to be important in maintaining the commitment of the staff and in getting future contracts. It is in the long-term interests of any company that is to be privatised that a significant measure of employee share ownership is provided for, but I do not think that it is necessary to put that specifically in the Bill.
I turn now to another point made about pensions by the noble Lord, Lord Haskel. Employees will be able to leave their accrued rights in the authority's pension scheme or to transfer them to the new pension scheme. The Bill provides that the new pension scheme must be no less favourable overall. It therefore seeks to protect employees' interests.
My noble friend Lord Boyd-Carpenter asked: why remove stamp duty? The reason is that there is a broad policy intention that when the Bill comes into operation it should achieve what we call "tax neutrality", which my noble friend will understand entirely. Tax neutrality is about ensuring that the process of transferring AEA Technology to the private sector does not of itself give rise to tax consequences. Successor companies start life in the private sector as if they had always operated in the private sector. The removal of the obligation to pay stamp duty is consistent with that.
My noble friend also asked about AEA Technology staff and what they did. It would take too long to set out in detail all the skills and experiences of the staff, but a very high proportion are qualified scientists and engineers across a wide range of disciplines. AEA Technology has some 1,860 graduate scientists and engineersalmost half its workforcespread across all six sites, with 613 engineers (of chemical, electrical and mechanical disciplines among others) and 411 other scientists, including those involved in biosciences, mathematics and the material sciences. There are also 836 chemists and physicists.
The noble Lord, Lord Haskel, referred to the Atomic Energy Authority and small firms. The AEA is closely involved in the process of technology transfer to small firms. It runs, or is involved in running, some 40 industrial clubs with a further 10 under development. Those activities will continue after privatisation on the same commercial basis as now. The noble Lord was also concerned about the implications for the science base. I understand that concern. As I said in my opening remarks,
I hope that I have answered most of the questions which your Lordships raised. It is right that your Lordships should ask such questions because the issue is important. The government divisionthat part which will remain in the public sectorstill has a notable and vital role to play in overseeing the decommissioning of the authority's nuclear facilities.
AEA Technology is now an established international science and engineering services organisation which operates in a highly competitive market and is operating overseas. We must ensure that the resources and expertise which make up AEA Technology are used for the greatest benefit of the country as a whole. Despite the apprehension, concern and disbelief of noble Lords opposite, we believe that that is best done by putting AEA Technology where it can make the greatest contribution to the United Kingdom economy; that is in the private sector.
That is what the Bill is about. I have no doubt that in Committee your Lordships will wish to ask questions. However, as I have answered so many today I have no doubt that the Committee stage will be correspondingly brief. I am grateful to your Lordships for having taken part in the debate and I commend the Bill to the House.