Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Inglewood: My Lords, I am most grateful to my noble friend. Despite his half frozen mouth, he has made comments which we believe to be entirely to the point. He shares much of our analysis of the situation and the way to improve things.

Atomic Energy Authority Bill

5.14 p.m.

House again in Committee on Clause 1.

Lord Clinton-Davis moved Amendment No. 3:

Page 1, leave out lines 15 to 21.

The noble Lord said: In moving Amendment No. 3 it may be for the convenience of the Committee if I take with it Amendments Nos. 4 to 6.

Amendment No. 3 is a probing amendment. What we seek to do—we could not apparently achieve it in Standing Committee in another place—is to ask the Government to suggest how the situation will work out in practice. We know that the Government have stated a number of things. They suggest that licences will be held by the AEA Government Division. The Institution of Professionals, Managers and Specialists has stated:

That institution goes on to say that the Government Division,

    "have announced publicly at the 4th International Conference on Decommissioning of Nuclear Facilities ... that they would like contractors bidding for decommissioning work to consider taking on site nuclear licences for some installations. Specifically they have invited bidders for decommissioning the Windscale Piles to construct their bids on the basis of taking over the nuclear site licence, if they wish. Whilst UKAEA might remain site licensee for the particular investments mentioned above ... and for the immediate period following divestment there are strong indications that in the future UKAEA with DTI support would prefer not to remain nuclear site licensee for some contracts".

We should like to know the situation.

Perhaps I may first deal with Amendment No. 6 and then Amendment No. 4. Amendments Nos. 4 and 6 refer to Warren Spring Laboratory, or indeed its successor activities within AEA Technology. We suggest that the words should be added:

17 Jul 1995 : Column 45

    "any property, rights, liabilities or assets that can be identified as having previously formed part of, or contributed to the work of the former Warren Spring Laboratory".

It is reasonable that we should seek to insist that the general way in which Warren Spring is set up within the AEA should be preserved in the public sector. It is appropriate that we pay tribute to the work of those engaged in Warren Spring over the years. They created a highly prestigious organisation which obtained a remarkable reputation not only nationally but internationally. Its work in the environmental field on clean air, landfill sites and all forms of pollution has been exemplary. I believe that the Government have to be assured that those activities should continue. We would have preferred to see them continue under a nationalised or publicly owned organisation, but that is not now happening.

When Warren Spring was absorbed into AEA Technology, something like 50 per cent. of those employees did not transfer. It is probably true that quite a lot of them voluntarily decided that they would not go. But the fact is—I hope that the Government will accept it—that some of the skills involved were lost when those people refused to move to Harwell.

Warren Spring is now broken up into its constituent parts. It is subsumed into the AEA organisation. We believe that that has not been helpful. Do the Government agree that they have a special responsibility to assist in monitoring the environment, and that it should be done objectively and independently of private interests? Do the Government also agree that they should maintain some expertise in the field, and that it is an issue which should not be contracted out to private agents exclusively?

A perfectly reasonable point was put by my honourable friend in another place, Dr. Lewis Moonie. He said:

    "What will happen if an activity is insufficiently profitable and no private agency is prepared to undertake it?"—[Official Report, Commons, Standing Committee D, 23/3/95; col. 21.]

Will the Minister answer that specific point? It was not properly answered in the debate which took place in Standing Committee D.

It may well be that in many instances in the field work of this character cannot be carried out profitably but there is a question of national interest in it being carried out. Consequently, there may be some important residuary role for government in that regard in ensuring that work which no private company might wish to undertake in the field is done, nevertheless.

Amendment No. 4 would insert into Clause 1 the words:

    "any employees of the Authority required for the safe management of any nuclear liability arising from the previous activities of the Authority".

My understanding is that Government Division is to keep responsibility as a purchaser of decommissioning services. I understand that that is what the Government wish it to remain. A purchasing authority will not necessarily include on its board anyone who has any or any sufficient expertise in nuclear waste management. That requirement is to be withdrawn subsequently in the Bill. Retaining that function allows many other

17 Jul 1995 : Column 46

functions to go to other companies which may bid for part of the decommissioning process for nuclear reactors. But the many responsibilities for safety should, in our submission, remain the concern of the Government rather than a company.

We are talking here about important issues. They have been listed by the IPMS as the following:

    "Managing the safe decommissioning of nuclear liabilities; Custody and maintenance of radiation dose records; Medical supervision of employees in subsidiary companies; Restriction of UKAEA Constabulary's powers over employees, or extension on the same footing to subsidiaries and contractors ... The definition of the nature and extent of work provided to or undertaken for [the Ministry of Defence]; Restrictions, if any, on commercial trading".

That is how the IPMS has listed the issues and no one could doubt their extreme significance.

The records have of course to be maintained over a long period, long after employees have departed from the company. It is critically important therefore that we take the issue into account. These are matters which I hope the Government will take fully on board in dealing with the amendments.

Lastly, I come to Amendment No. 5, in which we seek to prevent the transfer out, under the Bill's provisions, of people working in areas stated to be the mission of UKAEA Government Division. The Government Division published on 31st March 1995 the forward plan. The document stated that UKAEA had agreed with the DTI that Government Division's mission was to be:

    "To complete the UKAEA nuclear mission, whilst rapidly reducing the annual cost to the UK taxpayer of Government Division, by:

    Caring for and, at the appropriate time, safely dismantling active facilities no longer in use.

    Disposing of radioactive waste in an environmentally acceptable way.

    Making use of those UKAEA assets which cannot be disposed of, including live active facilities.

    Always ensuring that the programme is carried out at lowest economic cost consistent with safety and environmental requirements and acceptable financial risks".

In the amendment we seek to prevent those activities from being privatised through the procedures of the Bill. We believe that privatisation along those lines would create wasteful duplication and competition between Government Division and privatised functions, with a balance in favour of Government Division which will have access to government subsidy and underwriting.

Perhaps I may offer a resumé of the Government's arguments in another place. They said that they intended Government Division to contract out all or most of the work, some to AEAT, and that putting work out to competitive tender reduces costs in itself. The Government spoke of savings of at least £50 million expected in the three years to 1996-97. What evidence is there of any such saving in terms of costs? In my submission, there is none that competition in that area is likely to reduce costs on that or any comparable scale. Government Division chief executive Dr. Derek Pooley wrote to the trade unions on 26th June this year saying that the projected savings would be due: first, to

17 Jul 1995 : Column 47

planning; secondly, to highly commercial, and if possible competitive, negotiations; and, thirdly, to firm management of contracts. He added:

    "We do not yet have much evidence about the relative importance of these three factors".

The extra costs of items two and three, which I have just mentioned, from—to use a horrible term—"contractorisation", including maintaining an adversarial four-tier management structure, would probably outweigh any competitive savings. I believe that the provisions which we suggest would substantially improve the Bill. I beg to move.

Lord Fraser of Carmyllie: The noble Lord began by indicating that the first amendment which he moved, Amendment No. 3, is in the nature of a probing amendment. I am not entirely surprised that he indicated that, otherwise, taken at its face value, it might achieve exactly the opposite of what he was arguing for.

Clause 1(3) is in the Bill for a specific purpose. AEA Technology is currently not a legal entity, it is simply an operating division of UKAEA. In practice, there is a clear dividing line between it and the Government Division. But because it is not a legal entity, it is not possible to say expressly on the face of the Bill that the activities of the UKAEA transferred by scheme to a successor company will be those activities carried on by AEA Technology.

What is possible is to specify what will remain with UKAEA. That is what Clause 1(3) does. It makes it clear that ownership of and responsibility for the management of UKAEA's nuclear liabilities and those UKAEA sites subject to nuclear licensing will remain with Government Division in the public sector.

The noble Lord made something of a statement by Government Division at a conference, and as the noble Lord is aware, it was considered in some detail in another place during Committee stage. What was indicated then was that with regard to a particular decommissioning proposal, the Government Division is at an early stage of exploring how to structure that decommissioning project. To help inform the process, it has asked other organisations to give their views on not only the conventional option of working under the Government Division's nuclear site licence but an alternative involving the contractor holding the nuclear site licence.

That approach would involve a departure from Government Division policy, but the division would be failing in its duty if it did not examine any method of achieving value for money for the taxpayer. However, I emphasise that it would only pursue that alternative if it were to be satisfied that safety would not be compromised and significant savings could be made. Whatever views the noble Lord may take about the matter, I can confirm to him that nothing in this Bill alters that position.

I also take this opportunity to reassure the Committee that UKAEA's current responsibilities for nuclear security, the policing of nuclear sites and fusion R&D will also remain with Government Division. Government Division will retain responsibility for the management and disposal of associated radioactive waste.

17 Jul 1995 : Column 48

The privatised AEA Technology will be a leading player in the nuclear services market and operate some active nuclear facilities on UKAEA sites. But the nuclear market is only one of the many sectors in which AEA Technology operates and work on nuclear materials accounts for a relatively small proportion of its total business.

We are not talking here about the sale of a major nuclear operator in the privatisation of nuclear facilities. Ownership of all the facilities used by AEA Technology for its work on nuclear materials will in fact remain with Government Division.

I turn to the other two amendments. Amendment No. 6 would prevent the inclusion in transfer schemes of any property, rights and liabilities of the former Warren Spring laboratory or which contributed to the work of Warren Spring.

Warren Spring and AEA Technology's existing environmental technology business were merged last year and now operate under the flag of the National Environmental Technology Centre, NETCen, at Harwell and Culham. I join the noble Lord in paying tribute to those who worked at Warren Spring; but the merger has created a comprehensive centre of excellence in environmental technology. It will help British business both by helping it to minimise waste and pollution, itself reducing costs, and by providing a technology base to help British business meet ever more demanding international standards.

The merger has provided an organisation with a broader capability than either of its constituent parts and with a lower cost base. It is able to call on the broadly based technical skills and the marketing base of AEA Technology as a whole. It is also able to operate in wider markets than Warren Spring could ever have done it if had remained independent—and thereby make a more substantial contribution to UK competitiveness in the environmental services market.

For all these reasons it would make no sense to undo the merger, and indeed might run contrary to earlier arguments advanced that we should keep these activities all as a single unit. It would harm the prospects for AEA Technology as a whole; and it would deprive the UK of one of the world's leading environmental technology centres.

Let us now look at Amendment No. 4 and the first leg of Amendment No. 5, which would both have the same effect. Since they do not distinguish between employees of AEA Technology and UKAEA Government Division, they would deprive AEA Technology of the ability to compete effectively for future work by precluding the transfer of those of its employees currently working on projects for Government Division. They would undermine its competitive position in the UK and undermine its ability to compete in the international market for decommissioning and waste management services.

There are enormous opportunities in that market which we would all want to see AEA Technology and other British firms exploiting to the full. But this amendment would put a major obstacle in AEA Technology's way.

17 Jul 1995 : Column 49

It would also not only deprive the staff concerned of the opportunities that a privatised AEA Technology could offer them but could leave them stranded in Government Division with an uncertain future once the projects on which they were working come to an end. I cannot believe that that is anything other than an unintended consequence of the noble Lord's proposal.

To turn finally to the last limb of Amendment No. 5, it would, if adopted, wreck the sale. AEA Technology is a people business. It is nothing without its staff. If the staff could not be transferred, there would be no point in making a transfer scheme. No doubt we shall spend a good deal of time this afternoon debating amendments designed to improve the already very substantial protections for employees written into the Bill. I make no complaint about that. But I believe that their best hope for a prosperous future will be in privatising AEA Technology and allowing it to realise its full potential as a world-class business.

I have taken some time to respond to an important set of amendments, and the noble Lord quite properly took his time to spell out his concerns. I hope that I have answered them fully.

5.30 p.m.

Lord Clinton-Davis: I thank the Minister for that considered reply. With respect, it does not really meet the case that I put forward. I accept that the amendments as drafted are by no means perfect. The Minister is right in saying of my first amendment that it could lead to great difficulties. That is why I described it as a probing amendment. The deficiencies that we have on this side in drafting will of course fall on the noble and learned Lord in the not too distant future. He will then begin to experience the problems that we experience.

So far as Warren Spring is concerned, the Minister did not answer the point that I made which gives us some cause for concern; namely, there has been, I contend, a substantial loss of expertise on the part of those who did not want to move to Warren Spring. That cannot be to the advantage of the industry as a whole.

The Minister said something about a better contribution towards UK markets being effected as a result of this merger. I rather suspect that that has not yet happened. It may be a hope that the Minister has for the future, rather than spelling out the present situation. Perhaps he will clarify that point.

The Minister said that Amendments Nos. 4 and 5 effectively constituted wrecking amendments, since the sale would be wrecked as a result. We are dealing simply with a Bill that devises a way forward towards a sale. It does not affect the sale at the present time or when it is enacted. But when the Minister said that we should be affecting disastrously the situation of the employees, it is odd, is it not, that they have taken the view that these amendments should be moved? We are doing so on the basis of representations made to us by them. I think that they are probably in a better position than is the Minister to understand the situation—although I accept once again that the amendments may not be drafted in the most adroit way, for which I accept responsibility. It is quite a usual function on my part to submit maladroit amendments! However, one does try

17 Jul 1995 : Column 50

to get a point over. I invite the Minister to comment on the two or three points that I have just made and then I shall indicate that I propose to withdraw the amendment.

Next Section Back to Table of Contents Lords Hansard Home Page