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Lord Whitty: The noble Baroness has a wider experience of Committees of the House of Lords even than I do, so she will know that when a Long Title has a fairly wide definition, members of the Committee are prone to table all sorts of amendments. If she is giving us forewarning that such an amendment may appear later in our proceedings, I do not have the power to resist it procedurally. I may resist it in argument, but I suspect we may return to this argument later, if I understand her correctly.
Lord Lea of Crondall: I am gratified by the range and quality of the contributions made in response to the amendment. Things have been said from all parts of the Room that suggest that we seek to keep within the Bill's scope but to spell out the consequences of the philosophy, which is to keep the option open. Especially with the NDA, we want to do nothing to close off any contingency arrangement—I think that was my noble friend's phrase. Another phrase that he used about which I am not so sure was that nothing prevented the NDA from doing X, Y and Z. That is one reason for the amendment: the vires of the Bill must be pellucidly not preventing that.
What I think my noble friend referred to as the tertiary subsidiary point at the centre of the matter is the locus of the NDA on the sites. It will be the principal responsible agency on the site. It may be that someone else should be doing X, Y or Z, but the NDA will nevertheless have broad responsibility on those sites, will it not?
I am not making another speech, so I had better conclude. We are not looking for any change of policy in the Bill from that of the White Paper—not because some of us do not seek that; self-evidently we do, but we recognise that that is not the Bill's purpose. I hope that we have given each other food for thought about what can be done before Report. On that hopeful note, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Jenkin of Roding moved Amendment No. 8:
- Page 3, line 24, at end insert "after consultation with representatives of the industry, the NDA itself and the person in charge of the site where the installations or facility are located"
The noble Lord said: This is another amendment in the name of my noble friend Lord Dixon-Smith. It concerns a comparatively small question: whether there should be consultation with various people in the industry and the NDA before the Minister makes a direction. I cannot believe that that would not happen. That, no doubt, is the answer in the Minister's brief, in which case why not write that into the Bill? I beg to move.
Lord Davies of Oldham: I can give the noble Lord the assurance that on most occasions consultation would take place for all the best reasons. However, we are anxious that the amendment would introduce a mandatory requirement to consult. We can foresee the possibility of the kind of emergency where swift—or immediate—action would be necessary and it would be inappropriate to require the NDA to engage in consultation procedures.
The noble Lord will recognise that subsection (4) already requires the Secretary of State to secure the consent of the person with control unless that person is a public body, as defined in paragraphs (a) to (d) of the subsection. Beyond the legitimate interest of the NDA and the person with control of a particular installation or site, it is unclear what role representatives of the industry would play—or, indeed, who those people might be.
It would certainly not be possible to envisage who should be consulted when the NDA may have to move with considerable dispatch. So, although we recognise the intention behind the amendment—which is to tease out the extent to which we are committed to consultation—to make consultation mandatory would create difficulty in certain circumstances. On that basis, I ask the noble Lord to withdraw the amendment.
Lord Jenkin of Roding: I am not sure that I am convinced but at this stage I shall withdraw the amendment. We shall study what the noble Lord said and he should not be surprised if we decide to return to the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Ezra moved Amendment No. 8A
- Page 3, line 32, at end insert ", provided that person has taken the necessary steps to ensure that decommissioning work and liabilities are funded through the establishment and maintenance of a fully financed segregated fund for that purpose"
The noble Lord said: A number of amendments have been grouped with this one. Many members of the Committee who are present today were involved in discussions on legislation affecting British Energy. We had to face up to the problem that, for various reasons, that company had been unable to build up a fund to meet its nuclear commitments. Therefore, those substantial commitments, totalling no less than £3.3 billion, had to be taken over by the Government. The powerful
argument that the Government advanced was that we had to keep those facilities running in the wider interest of the nation.None the less, none of us wants that situation to recur and the purpose of the amendment is to avoid that. Clause 3(4)(e) refers to,
- "a person who has consented to the giving of the direction",
In no way should it be implied in the Bill that any future operator in the private nuclear sector should feel that his liability to deal with nuclear waste would automatically be taken over by the public sector. We need a safeguard to ensure that the British Energy situation which we had to face recently does not recur. I beg to move.
Baroness Miller of Hendon: With the permission of the Committee and for its convenience—I am sure that the noble Lord, Lord Ezra, will not mind—we have noted that Amendment No. 8A deals with the segregated fund, although in his wording it says a "fully" segregated fund. We have tabled two amendments, Amendments Nos. 16 and 64, which deal with the segregated fund. It may be for the convenience of the Committee if I speak to our two amendments at this stage. It would be silly to repeat the debate, even though the word "fully" does not appear in our amendments.
Clause 5(2) deals with income received by the NDA from directions which it gives to anyone in relation to a nuclear installation site or facility in which it does not have a financial responsibility under the financial provisions of Clause 21. Subsection (2) enables the NDA to make what are described as,
- "payments to the Secretary of State".
The clause entitles the NDA to charge someone for something. Clause 22 relates to expenditure and receipts by the NDA and includes a provision for the Secretary of State to make grants to the NDA. In both cases, the Bill requires the NDA to pay its income—other, of course, than the grants from the Secretary of State—to either the Secretary of State or the Consolidated Fund.
The Consolidated Fund could be described as being a euphemism for the bottomless pit or black hole operated by the Treasury, into which money somehow disappears, never to re-emerge in exactly the same form. Money paid into the Consolidated Fund is totally controlled by the Treasury, and there is no certainty that it will be available for the purpose for which it was intended if the Treasury has other calls
upon it. Your Lordships may recall the pre-privatisation days when British Telecom, with its monopoly of telephone services, was a kind of milch cow for the Treasury, earning vast amounts annually but starved of funds for expansion of the service and new technology, and when there were waiting lists of weeks or months for a new line.The work of the NDA is too important, too vital, to leave its funding in the hands of the Treasury in that way. The Treasury may have a different set of priorities for the use of the money. It is too important to allow the Treasury to take the money with one hand, to give it back with the other and, with a classic piece of creative accounting, to claim credit for all the money that it is providing—in other words, funding the NDA partially with its own money. Let me draw the Committee's attention to a few facts. BNFL has pointed out, among what it calls "key messages" in its recent brief, that:
- "The creation of NDA proposed by this bill will lead to a transfer of assets and liabilities and a subsequent restructuring of BNFL's balance sheet".
There is also the question of the cost of the new Civil Nuclear Constabulary. We still await a clear commitment from the Government that they will fund the transition costs of the current non-statutory police force. Those costs are estimated at about £1 million. The new civil constabulary is estimated to cost between £30 and £40 million a year, which is around 30 per cent more than at present. That money has to come from somewhere. Incidentally, BNFL thinks that the Treasury may be tempted to merge the new nuclear constabulary with the MoD force, possibly to save on costs. Although I am not debating that, it is clear that it is the Treasury and not the NDA that will have a large hand in policy making.
The Bill provides for the work of the NDA to be funded directly by the Government in the form of an annual grant. Over the years, the nuclear industry has set aside significant sums to discharge its nuclear liabilities. Nirex claims that a considerable proportion of those assets were provided for long-term waste management, as distinct from decommissioning and clean-up costs. Nirex then points out that funds for long-term clear-up must not be diverted into short-term waste management. Those funds must be ring-fenced and kept clearly separate from the £48 billion of liabilities that the NDA must address in the short term.
Depending on what the Minister may say—I am not sure which of the Ministers I am addressing on this point—I shall be pleased to hear from him by letter if he cannot deal with my points today. Later, either I or my colleagues in the other place may have to table a further amendment on the matter.
We are not talking about trivial sums here. Nirex is responsible for up to almost 14 per cent of the discounted BNFL liabilities. Those amount in total to between £700 million and £1.24 billion. While that marks a slight digression from the two amendments I
am now addressing, I seek to make the point concerning control of the NDA's own income, generated by its own activities. My amendments would provide for that net income to go into a ring-fenced fund, still controlled by the Secretary of State, but freed from the grasp of the Treasury. Thus, the Treasury would be relieved of the great temptation to use that money for some purpose for which it is not intended. I hope that the Treasury would like that.5.30 p.m.
Lord Jenkin of Roding: Perhaps I may add a few words to what my noble friend said. I preface by saying that, as a former Treasury Minister, I did not entirely recognise what my noble friend had to say. The Consolidated Fund is not a bottomless pit and it is very much subject to parliamentary control. However, the main point that my noble friend sought to make is right.
There is a long history of this. The Select Committee report contains words of wisdom about this. Paragraph 6.41 states:
- "We have sympathy with the proposal for a segregated fund".
The argument has gone on since then. It was dealt with at some length by the Select Committee in another place towards the end of last year. I would not dream of reading out every paragraph, but it is interesting to look at the evidence on which it based its recommendation that there should be a segregated fund. It is attached to the report in the same volume.
The committee heard evidence from BNFL, which stated:
- "Given the restricted funds available to the NDA and the fact that it has no power to borrow, it seems very likely that BNFL or any other M&O"—
- "contractor would be looking for NDA commitments to be backed by government comfort".
There is some suggestion in the report that perhaps in the light of the Government's assurances the objections of BNFL and the objections made on behalf of the industry by the Nuclear Industry Association—several paragraphs in the report refer to this—had been set at rest. That is not entirely the case. The current position is that the Government have said that they would prefer an account, whereas the industry still would prefer a segregated fund, the subject of the amendment tabled by the noble Lord, Lord Ezra. But, in relation to the account and how it will be funded, the Government have yet to finalise and publish the mechanism for determining the initial and subsequent annual contributions.
In those circumstances, the people who will look to the NDA to pay their contracting charges will require to be assured that as they incur the expenditure so the NDA will pay the bill. That is not yet the position. As my noble friend said, if there was a segregated fund, where the money was clearly there, there would be greater reassurance.
No doubt the present Chancellor of the Exchequer is even now wrestling with the problem—the results of which will appear in the next budget survey—of how he will meet his priorities for public spending on, for instance, health and education. If there turns out to be a hole, it would not be difficult to say that perhaps some of the nuclear decommissioning can be deferred for a while. In the mean time, what would the contractors do? If there were a fund, as has been powerfully argued by a number of bodies, including the Select Committee in another place, that assurance would be there.
That is the case made by the noble Lord, Lord Ezra. He quoted the example of British Energy, but that rather caught up with the Government at short notice, and they had to deal with the issue under considerable difficulties when we were debating the Bill last year.
We are looking at a long-term programme. It has had some years in preparation and build-up, with the original White Paper and the draft Bill that the committee considered in pre-legislative scrutiny. With the evidence that one has, there can be no excuse for the Government being caught short. It is the presence of a segregated fund rather than an account that relies on annual subvention from the Treasury that will provide the necessary reassurance.
It is an argument that must be taken seriously. I understand the difficulty that Ministers in the DTI and in Defra have convincing their Treasury colleagues of the weight of the arguments that are being made. If I had been sitting on the other side of the fence, I might have taken some time to be convinced. It is so important. The Government have, perfectly properly, made the whole decommissioning process the centrepiece of this stage of their energy policy. I argue strongly that they must make sure that it works and that, three or four years down the line, other pressures on public subvention do not stop the programme working as Ministers now wish. I support the amendment tabled by the noble Lord, Lord Ezra, and the amendments to which my noble friend spoke.
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