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Lord Jenkin of Roding: My Lords, I am deeply grateful to the Minister for that concession, which goes a very long way to meet the concerns voiced in this House and in another place about the effect of lines 16 to 18. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Jenkin of Roding moved Amendment No. 7A:

On Question, amendment agreed to.

Lord Sainsbury of Turville moved Amendment No. 8:

    Page 2, line 19, after "order" insert "made by statutory instrument"

The noble Lord said: My Lords, I made it clear in Committee that we accepted in principle the amendment to change the scrutiny procedure for the delegated power from negative to affirmative resolution. I have tabled two amendments, Amendments Nos. 8 and 9, which together provide the correct technical drafting for that purpose. Amendment No. 8 makes it clear that the order to be made would be a statutory instrument, and Amendment No. 9 sets out the procedure for approval of the order. The noble Baroness, Lady Miller, expressed concern that that procedure should ensure

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that both Houses of Parliament had their say, and the amendment of course does that. I hope that she will not move Amendment No. 10. I beg to move.

Baroness Miller of Hendon: My Lords, we are most grateful to the Minister for tabling Amendments Nos. 8 and 9, which we are very happy to accept.

On Question, amendment agreed to.

Lord Sainsbury of Turville moved Amendment No. 9:

    Page 2, line 24, leave out subsection (4) and insert—

"(4) Such an order may not be made unless a draft of it has been laid before, and approved by a resolution of, each House of Parliament."

On Question, amendment agreed to.

[Amendment No. 10 not moved.]

Clause 3 [Amendment of Schedule 12 to the Electricity Act 1989]:

Lord Jenkin of Roding moved Amendment No. 11:

    Page 2, line 37, at end insert—

"(5) The Secretary of State, in making any grants or loans from time to time under this Schedule (as amended) shall impose such conditions or provide such incentives (or both) as he may in his discretion consider are necessary to ensure that the British Energy company operates its nuclear stations as if it were exclusively responsible for the discharge of nuclear responsibilities."

The noble Lord said: My Lords, the amendment is tabled in my name and that of my noble friend Lady Miller and the noble Lord, Lord Ezra. We have been very concerned by the apparently open-ended liability that the Government are taking on for the handling of the nuclear liabilities of British Energy. That has given rise to a good deal of debate, both in this House and in another place.

The Minister went a long way to persuade us that the restructuring could not be sustained if the other bodies involved—they include the banks, of course, and a great many other people—could not be confident that the tab would be picked up by the Government as British Energy's nuclear liabilities matured. The noble Lord, Lord Sainsbury, argued that the restraints and limitations that we sought to oppose in Committee might threaten the restructuring. We on this side of the House have no intention whatever of doing that and have not repeated our amendments that would put a limit on the amount.

However, the noble Lord, Lord Sainsbury, assured us in Committee that the Government were determined that the underwriting of the nuclear liabilities of British Energy should not be seen as an open cheque. He was repeating words which have been used more than once by his right honourable friend the Secretary of State for Trade and Industry, who has been clear about that.

The Minister spelt out in Grand Committee the method that he intends to use in steering British Energy's handling of its nuclear liabilities. He said,

    "the Government propose to put in place a series of controls and incentives to ensure that BE runs its nuclear stations as though it were it were exclusively responsible for the discharge of nuclear liabilities".—[Official Report, 17/3/03; col. GC 31.]

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It is relatively easy to say that, but there could be some difficulties and perhaps some reluctance on the part of the people involved to put that into effect. We therefore propose that those words should be written into the Bill. That is the purpose of the amendment.

We have added three extra words—"in his discretion"—so that Government may have some flexibility—that is a favourite word of the noble Lord—as to how the provision should be applied. We believe that it is important that all concerned should see on the face of the Bill that that is what British Energy has to do so that the nuclear liabilities taken on by the Government are kept within bounds.

To use the Minister's own words, our proposal would give "additional discretion". I hope that he accepts the amendment. I beg to move.

Baroness Miller of Hendon: My Lords, there is no purpose in adding the same words as my noble friend. We agree with every word that he said. The Minister was very helpful in trying to address our deep concerns. He has been extremely generous. As my noble friend said, the words that have been put into the amendment were used by the Minister himself, but we added the opportunity for the Secretary of State to use "his discretion", because we are all aware of how much the Minister needs, as well as likes, flexibility.

Lord Sainsbury of Turville: My Lords, the noble Lord, Lord Jenkin, tabled an interesting amendment, which moves the issue on from the discussion in Committee. This amendment refers to an important principle; that is, that the Government, in providing support to BE for its nuclear liabilities, should not take away the economic incentive for BE to operate its stations in a responsible way that would minimise the size of those liabilities.

We fully support that principle, as we have pointed out on several occasions. However, I do not believe that it would be appropriate to try to convert that principle into detailed legal drafting that would apply through primary legislation.

The Government are working intensively on the precise details of the undertaking that it will give to British Energy. That binding undertaking would come into effect at the moment the restructuring takes place and will then have long-term effect; that is, over many decades. We are going out of our way to build a number of very detailed controls into this undertaking. There is a whole stream of work on this issue and departmental officials are being advised by external experts on the management of nuclear liabilities. That is all sensible, prudent planning for protecting taxpayers' interests. Having gone to all this trouble, we are not going to change our mind and hand BE a blank cheque telling it that it can have the money with no strings attached. The company itself has agreed to the principle of the conditions which we wish to impose.

I do not believe that it is necessary to go into this degree of detail in primary legislation. It is clearly right for Parliament to have some form of scrutiny over the Government's management of this process, but that

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could be properly handled by the existing arrangements of the National Audit Office and Public Accounts Committee. I am sure that something as significant as this undertaking will receive early scrutiny. I hope, with that reassurance, that the noble Lord will withdraw the amendment.

Lord Jenkin of Roding: My Lords, I am grateful to the Minister for that careful reply, which amplifies what he told us when we met him. I certainly understand the points that he made.

Before I withdraw the amendment, perhaps I could make one extra point. In the very full letter that the Minister wrote to me, which was dated 28th March, he answered the question I had asked in Committee about the Nuclear Liabilities Fund. He spelt the matter out much more clearly there than it had been in any document that I had read. It concerned not only the Nuclear Liabilities Fund, but also the Nuclear Decommissioning Fund. The page and a half of his letter was very illuminating and I think it should be in the public domain. I do not believe that there is anything confidential about it. If I were to submit a Written Question asking about this matter, would the Minister reply—it would be a long answer—setting out what he has set out in his letter to me?

Lord Sainsbury of Turville: My Lords, there would be no difficulty in that. If a Written Question is asked, we will certainly seek to put all that information in the public domain.

Lord Jenkin of Roding: My Lords, I am most grateful for that. It is a matter of wide concern as to how those liabilities will be handled, not only to British Energy, but to the public sector as a whole. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon moved Amendment No. 12:

    Page 3, line 24, at end insert—

"( ) This Act (except for sections 3 and 4) shall expire five years after it receives Royal Assent unless it has been extended from time to time for periods not exceeding two years by resolution of both Houses of Parliament."

The noble Baroness said: My Lords, this amendment is what is colloquially known as a "sunset clause". We believe that it is necessary because this Bill empowers the Government to spend large sums of taxpayers' money—in some cases, uncapped sums—on the nuclear industry.

As your Lordships will have seen, we have accepted—sometimes with some reservations—the need for the Government to have such powers. However, in an interview on BBC news on 5th September last year, the Secretary of State expressly disclaimed any intention of seeking a blank cheque from taxpayers for the benefit of British Energy and its shareholders.

In Grand Committee, the noble Lord the Minister explained the ongoing nature of the commitment that the Government were either having to undertake or

3 Apr 2003 : Column 1428

underwrite. It is essential that Parliament should have the opportunity, from time to time, to review what has been going on. I also had some general reservations about the Bill as a whole, because the powers that the Government are taking in theory enable the Government to undertake a backdoor process of re-nationalisation. However, the noble Lord has given us quite a lot of comfort today.

However, the Minister for Energy and Construction admitted in another place:

    "It is true that repealing"—

Sections 72 and 74 of the Electricity Act 1989—

    "could, in theory, permit the Government to acquire shares in . . . other electricity companies where we cannot currently do so, but I stress that we have no intention of doing so".—[Official Report, Commons, 27/1/03; col. 589.]

The noble Lord made it clear that where possible he has tried to clarify that it is not quite as bad as we thought.

As I told your Lordships at Second Reading, and as I repeated in Grand Committee, while I accept what is said to be the Government's present intention, I really would have liked to have put temptation irrevocably out of the Government's way. However, having reached this stage of the Bill, the best I can do is to try to insist that the Government periodically come back to Parliament to account for their actions.

Your Lordships will notice that in my amendment I have proposed a lengthy initial period—five years—and for extensions for two years at a time. That would not impose any undue strain on the parliamentary timetable. In the Explanatory Notes to the Bill the Government conceded that,

    "In the main, Part 2 [of the 1989 Act] has served its purpose and the provisions no longer apply or are now irrelevant".

I believe that in time, if British Energy manages to extricate itself from its present problems, this Bill too may no longer apply and may become irrelevant. For that reason it is essential that this Bill should have a "use by" date on it.

I believe from his response to my amendment in Grand Committee that the Minister is not entirely unsympathetic to what I am trying to achieve. But he did have some reservations, if the Act did expire, about the knock-on effects that that might have on Clauses 3 and 4 lapsing at the same time. He particularly singled out those two clauses. While I agree that the tax clause, Clause 4, has to be protected, I am not so sure if it will be a great loss if the highly technical provisions of Clause 3 were to go when the need for extended financial provision ceases.

However, cutting the Gordian knot, I am offering in this revised amendment to try to take into account all the concerns of the Minister to save both Clauses 3 and 4 from the effects of the sunset clause. If that does not entirely resolve the Government's reservations—I hope it will, in particular because the Explanatory Notes refer to Clause 2—perhaps I may suggest that as the Government's drafting facilities are much more extensive than mine they could put the matter right at Third Reading. However, the principle of my

3 Apr 2003 : Column 1429

amendment remains. It is essential that the Bill, by its very nature and aims, should have an expiry date. I beg to move.


Lord Sainsbury of Turville: My Lords, I am grateful to the noble Baroness for taking into consideration the points I made in Committee about the earlier amendment that was tabled seeking to time-limit the Bill. My comments then related to the difficulties in the application of that amendment as drafted to Clauses 3 and 4 of the Bill. Based on that the noble Baroness has now focused her amendment on Clauses 1 and 2.

Unfortunately, there are still difficulties with this amendment. I hope I did not give the wrong impression in my earlier discussion of the amendment which was perhaps a little brief as it was the last amendment under consideration. My remarks about Clauses 3 and 4 were meant as examples of the problems a sunset clause would cause. I specifically prefaced the explanation with the words "for example". I did not mean to suggest that any concerns related only to Clauses 3 and 4. So while I am grateful to the noble Baroness for clearly taking the trouble to adjust her amendment in the light of the earlier debate, I am afraid that this amendment still creates problems.

Let us first consider Clause 1. This clause provides specific authority to incur expenditure on British Energy companies. We have already discussed this clause a little today. I am hopeful that there will be no need for this clause in five years' time. But I am not comfortable with putting in such a restriction on the clause, particularly at this stage when we are still working up the precise detail of our legal undertaking to the company. I believe that it is important to retain flexibility here.

I have stated that our restructuring support to the company will be in relation to its nuclear liabilities and that as a matter of policy this funding would be done under Schedule 12 to the Electricity Act. That remains the case, not least because we have put in place a tax disregard provision that applies to this schedule. But the existence of Clause 1 provides an important safety net. It provides legal certainty that we have statutory authority for our restructuring support to BE, avoiding doubt over whether some element of this support might not be covered by specific authority because it is not quite clear whether or not it falls within Schedule 12. For example, I have already mentioned that having Clause 1 available gives us certainty that we have authority for paying a nominal sum to acquire BE's stations at the end of their life—one of the conditions of our support to BE that we are insisting on in order to protect taxpayers' interests.

One last point on this clause is that any repeal of Clause 1 would need to be supported by detailed savings and transitional provisions to address liabilities, obligations, and so on, that have been already incurred under that clause. We cannot be sure at this stage what those provisions would need to address.

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I turn to consider Clause 2. The substantive repeal in the first part of subsection (1) would not be affected by a sunset provision as it is clear that a repealed provision remains repealed. The saving provision in the second part of subsection (1) is there, as we have already said, only for the avoidance of doubt and so it should be acceptable there too.

It may be possible to have a sunset provision on the power to make an order by statutory instrument, but I am not sure it is worth a sunset clause on such a narrow basis. I would also point out that although we would intend to use the delegated power to repeal Part 2 soon, there is always a chance that the need for a consequential provision in respect of such repeal might come to light only later on.

I know that the noble Baroness is not a fan of the Government's desire for flexibility. Governments are always more in favour of flexibility than are opposition parties, and civil servants value flexibility above all else when they are dealing with such issues. However, I hope that in this case she will understand our desire to retain this flexibility and that she will be willing to withdraw her amendment.

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