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Lord Fraser of Carmyllie: I have no intention of accusing the noble Lord of being anti-nuclear. I can say briefly to him that the amendment is unnecessary but, given the nature of his anxieties, I shall take a moment or two to explain why. I say that for two reasons. First, it is not our intention to transfer any fissile material to a successor company. Secondly, a fully adequate regulatory regime is already in place—and it is the latter reason that may be of greater interest to the noble Lord.

The Export of Goods (Control) Order 1994 provides that any exports of such materials and equipment require a licence. No licence is issued unless my right honourable friend the Secretary of State is satisfied that the requirements of the treaty are met. In addition, the Nuclear Safeguards and Electricity (Finance) Act 1978 gives effect to the international agreement between the UK, the IAEA and Euratom for the application of safeguards in the UK, pursuant to the non-proliferation treaty. And we are bound by the Euratom Treaty, under

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which all civil nuclear material in the UK is subject to safeguards administered by the Euratom Safeguards Directorate.

The regulatory framework set up under the Euratom Treaty ensures control of all civil nuclear material, wherever it may be held. That framework applies, and will continue to apply, to all activities carried out in the UK irrespective of who carries them out, and irrespective of whether they are carried out in the public or the private sector. So the noble Lord's assumption was correct; that is, that there would be the necessary continuity.

Let me now say something about the basis on which AEA Technology will carry out work on special nuclear material. After privatisation, that work will be carried on in buildings which will remain under the control of UKAEA's government division for licensing purposes and subject to arrangements for nuclear accountancy approved by Euratom. In other words, there will be no change in the basic regulatory provision. And employees of AEA Technology, or a successor company or companies, who deal with SNM will continue to be vetted in accordance with the UK Government standards.

All work on special nuclear material will be undertaken in facilities owned by UKAEA's government division, under the terms of licences to operate. The government division will make it a condition of all such licences that all employees operating these facilities continue to be appropriately vetted. Equally, the statutory framework of the Official Secrets Act binds all employees of AEA Technology and will continue to do so after its separation from UKAEA and after privatisation. Employees and ex-employees will therefore continue to be under a duty not to reveal any information gained in the course of their employment on sensitive government contracts.

I hope that that reassures the noble Lord that a solid regulatory framework is in place. He also asked a question in relation to possible foreign ownership of AEA Technology. Of course we welcome overseas investment into this country, provided that the potential buyers of a privatised company meet all the criteria attached to the sale. If that is the case, there is no reason why they should be discouraged simply on the grounds of nationality.

In this case the decision of to whom the business will be sold will depend on a wide range of criteria. They will include the need to maintain its reputation, independence and impartial advice, and the interests of its customers who will include the Government. It follows that the Government will consider the need for a special share and for any other form of protection in the light of decisions on the form and method of sale and of discussions with the business's major customers. I hope too that that explanation is helpful to the noble Lord.

Lord Peston: I thank the Minister for that explanation. It was particularly helpful for it to be on record. Again, one cannot judge these issues until we are slightly closer to knowing who the new owners may be and on seeing later developments. There is an amendment to come relating to the special share and we

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shall be able to talk about its role at that time. Again, I thank the Minister warmly for that answer and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Haskel moved Amendment No. 13:

Page 13, line 19, at end insert:
("( ) Before giving or refusing his approval for the purposes of this paragraph the Secretary of State shall consult the trade unions and other bodies representing the employees of the Authority.").

The noble Lord said: In moving Amendment No. 13, I shall speak also to Amendments Nos. 20, 21, 31 and 38. These amendments concern a number of matters, one of which is that they require the Secretary of State to consult the employees and their trade unions before ordering, approving or modifying a transfer scheme or selling the shares in a successor company.

We all agreed that this is a people business and everything that that implies. We want to ensure that the Secretary of State does not simply go through the motions of consultation, but that he carries the employees with him. We are trying to ensure that he carries out best practice. We must remember that when the employees were signed up, they were employed as public servants. The Minister's department supports and encourages Investors in People. It held a seminar in London recently on that very topic. The main speaker listed a string of policies endorsed by Investors in People for improving a business by concentrating on employee development and welfare. We have all agreed that AEA Technology's competitive advantage will only be through its people. We want to make sure that those practices are carried out. It is an old saying in business that if one is not a good employer, one is training staff for one's competitors.

If the company is floated, we want to ensure that proper opportunities exist for employees to benefit—not just executive share options as in the privatised utilities. Bonuses should perhaps be paid in shares to encourage long-term management and company loyalty. We want to ensure that the result of this privatisation will not be 40 years of training and experience in AEA Technology simply being transferred to overseas competitors because of poor morale and poor management.

The amendment seeks to ensure that there is a sense of nurturing and developing a sense of direction. That is in accordance with best practice preached by the Minister's own department. The weakness in the Bill is that everything seems to require the approval of the Treasury, not the agreement of the staff and the employees. That indicates to us that the Government are purely interested in the short-term financial aspects of this privatisation. We, on the other hand, are interested in the long-term continued success of the business and so it is just as important to carry the staff and the employees. That is the difference between us.

Some of these amendments refer to the TUPE regulations. They will be dealt with by my noble friend Lady Turner of Camden. I beg to move.

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6 p.m.

Baroness Turner of Camden: I believe that the Government may argue in connection with these amendments—I believe that they did in the other place—that the TUPE regulations cover consultation and cover it at the appropriate level. The Government made that point in Committee in the other place. However, it is not all that clear how TUPE will operate and in the meantime the staff could be left in limbo. As this is a publicly-owned enterprise, the Government have the main responsibility for ensuring that consultation takes place at the appropriate time and cannot simply leave things, as I think they may argue, as a matter for the current management of the authority. The main responsibility is that of government.

I should have thought that the Government would want to retain the support of this highly trained and extremely valuable staff. As my noble friend has just indicated, we are talking about a very sophisticated workforce. They are unlikely to do so if the people are left in doubt and are not taken along with the arrangements that will be made on their behalf about their futures. It was to relieve employees of that kind of anxiety that the acquired rights directive was first promulgated. That is referred to in Amendments Nos. 14 and 15 but it is part of this whole group of amendments which concern consultation. I hope that the Government will agree this time round that what is being suggested here is important and that they will accept what is being said. While they may argue that they do not have to put it into the Bill because the TUPE regulations are there anyway, in order to ensure that people know that they will be properly covered and appreciate that they are being cared about, I think that it has to be put on the face of the Bill.

Lord Peston: Before the Minister replies to those comments, we may be—I am sure it is my fault—slightly at cross purposes. I have in this group Amendments Nos. 31 and 38 which relate to Clause 7 and Schedule 2. They are to do with the disposal of securities. I had intended to raise the question of the so-called golden share, or government share, under that heading. Would the noble and learned Lord rather deal with the points that have just been raised and then I can speak later? Which would he prefer?

Lord Fraser of Carmyllie: Given the width of the querying from the Opposition Front Bench, perhaps I may leave the golden share issue until later.

In spite of the comment of the noble Lord, Lord Haskel, that we were concerned only with short-term financial aspects of the privatisation, I would wish to reassure him that I entirely agree with him that AEA Technology is a people business. I have used the term already. I have no doubt that one of management's key tasks now, as well as after privatisation, must be to ensure that staff are properly incentivised. The performance and profitability of the business depend on that. As regards employee participation, we believe that it is in the long-term interests of any privatised company that a significant measure of employee share ownership is provided for. The noble Lord may wish to return to this at a later point in the Bill, but perhaps I may say to

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him that we shall look carefully at any proposals for employee participation put forward by the management of AEA Technology or its successors.

The Government would expect any scheme that is put forward to be broadly-based and recognise that AEA Technology ultimately depends on the efforts of all its staff. We are committed to involving employees as much as possible in the privatisation process. Where we part company is in our assessment of what is the impact of these amendments. It would appear that the trade unions and staff associations would have an automatic right of consultation before the Secretary of State was able to exercise any of his powers in relation to transfer schemes or before either the Secretary of State or the authority could dispose of any of their securities in a successor company. While they are not overtly asking for a union veto over the purchaser of AEA Technology, it appears to us to be tantamount to that. I do not think that would be right. The final decision on the sale has to be made by the Government in the light of market circumstances at the time and in the best interests of both AEA Technology as a business and of the taxpayer.

Turning to the TUPE amendments—I anticipate that we shall be returning to them before the evening is over—I would remind the Committee that the authority will in any event be under a duty to consult staff on the transfer of terms and conditions under the TUPE provisions. In addition, paragraph 9 of Schedule 1 to the Bill specifically places a duty on the Secretary of State, before giving any direction, to give sufficient notice to the authority to enable it to comply with its obligations under TUPE. I hope that that has been helpful in bringing together what we wish to achieve and giving a specific impact—

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