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Lord Whitty: Although noble Lords suggest that all issues of confidentiality are the same, they can be very different. The example quoted of decommissioning and cleaning up a nuclear site deals with the transfer of responsibility. Different issues arise from those that we discussed earlier.

The amendment has two parts. First, it requires that the Secretary of State shall give consideration to whether confidential information is strictly necessary. The second part, to which I have some objection, enables a transferor to refuse to disclose information unless the Secretary of State agrees to be bound by the confidentiality obligations that exist for the transferor.

On the first part, it is difficult to object to a provision stating that the Secretary of State must determine that something is necessary. If it were not necessary, it would be unreasonable. The Secretary of State must operate with care and diligence and must act reasonably within the powers. Certainly in areas of very sensitive information and commercial confidentiality, the general requirements on actions taken by the Secretary of State apply very acutely and do not, therefore, need to be repeated in statute. I agree that one would accept the objective of ensuring that the Secretary of State takes seriously whether it is necessary or not that such information be disclosed to her.

However, the amendment goes further and gives rights to a transferor to deny the Secretary of State information, which, if disclosed,

Clearly, on disclosure in the first instance to the Secretary of State, the Government act sensitively in relation to commercial activity. So, as a general principle, the Secretary of State is under an obligation not to use or disclose information to anyone pursuant to statutory powers and only to use information for proper statutory purposes.

Of course, it is for Ministers to judge how to determine that it is necessary to disclose confidential information in such circumstances. When dealing with the operation of a decommissioning site, certain information would be available. As the noble Lord, Lord Jenkin, mentioned in his example, BNFL, in

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beginning to clean up and decommission the site, would have taken certain measures which would have involved the use of certain materials and labour, and certain costs would have been incurred. Certain contractual arrangements would have been entered into with subcontractors and others on what would be a potentially seriously dangerous site.

It is reasonable that the Secretary of State and the NDA should have information about what has been done and the commitments that have been made in order for a transfer to take place. Otherwise, one would be bringing in a new contractor, presumably following a fairly rigorous competitive process, to a potentially highly dangerous site where he would act without full information. In relation, particularly, to the management and decommissioning of nuclear sites, there is an argument that the Secretary of State should have the ability to demand the information and pass it on to whoever takes over the responsibility. It is a power that would have to be exercised reasonably and judiciously, but it is one that statute should not deny to the Secretary of State.

In addition, the provision about making transfers follows fairly well established precedents in that privatisation legislation in general has used transfer schemes to give effect to new organisational structures. That has involved disclosure of some information that had previously been with a previous operator, which, in most cases, was the public sector operator. The Electricity Act 1989, for example, contains a similar provision. The basic principle is that all clean-up-related intellectual property and other similar information is ultimately the NDA's and the NDA should be able to allow the contractors to use its intellectual property rights for clean-up purposes without cost to them.

The treatment and ownership of any such property that is generated while working on an NDA contract should be specified in the contract, but it is transferable. The aim is to ensure that we do not get into a situation where for safety and procedural reasons the new contractor is deprived of vital information on what has already happened on the site or where the taxpayers are faced with a double cost in the event of a transfer.

The other issue relating to the example raised by the noble Lord, Lord Jenkin, is that there was a slightly erroneous assessment of the situation with BNFL. If we talk about BNFL as a site licensee, site licensees will remain in place throughout the process and their position will be competed for but not on a competitive basis. Therefore, it is right that the person taking over the transferred responsibility should be properly informed and should be able to operate. I do not believe that the situation will be quite as the noble Lord suggested. Nevertheless, it is right that ultimately the responsibility should be on the Secretary of State, involving judgments and reasonable behaviour. The basic principle is that the Secretary of State should have the option not only to require the information to be disclosed but also to be able to pass on that information to the transferee company.

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I accept that there will be anxieties about that and I accept that reassurance needs to be given, but I do not believe that, in effect, a veto being given to the transferor company is the way to achieve such reassurance. After all, the new contractor may well be in the same situation in a few years' time and may have to face the same problems.

5.45 p.m.

Lord Dixon-Smith: Perhaps I can explore the point further with the Minister. If the transferring company has embarked on a clean-up process, I completely understand the need of the NDA to know what that company has been doing on the site. That is a sine qua non situation. However, I do not understand whether the transferor would need to disclose the method by which he had undertaken the clean up. That is a slightly different point.

Let us suppose that he had devised a novel method of deactivating a reactor that no one had ever used before, and it worked. That would be a piece of intellectual property of very real value. I understand the need for the NDA to know what has been done, but I do not yet understand the need for the transferring company to disclose how it has done what it has done. That is a slightly different point. There may be a necessity—I do not know. Someone may develop something which is a piece of intellectual property that has real commercial worth. I believe that that point needs to be explored further.

Lord Whitty: There are two issues here. To start with, in most cases when talking about intellectual property, the NDA will own that intellectual property relating to clean-up technology and not the contractor. The contractor will be operating on behalf of the NDA. However, in the example indicated by the noble Lord, the contractor may have a novel way of dealing with the material that he would not wish to disclose to a competitor or someone taking over responsibility for the site. When dealing with nuclear material, it is important to know what method has been employed and what are the possible effects.

One can envisage circumstances where, if a different method were applied to complete the task or the next task, serious mistakes could be made if one did not know what had been done with the material at an earlier stage. One could argue that one does not have to know every last detail of the process, but one would need to have a good idea of how fissile material had been dealt with under the previous contract. That would require the method to be available and disclosable, should that be necessary. I am not saying that in all circumstances it should be disclosed, but it would be wrong for statute to prohibit the ability of the Secretary of State to require such disclosure.

Lord Dixon-Smith: The joy of a Grand Committee is that one has some flexibility to speak again. I believe that we are in danger of discussing two separate points. If someone is under contract to the NDA, I entirely understand that the rights to a particular piece of intellectual technology would belong with the NDA. I

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take that out of the equation. However, we are discussing someone who originally had no arrangements at all with the NDA. Let us suppose that such a person devises a piece of intellectual property and that it is absolutely necessary for the NDA to know exactly what has been done. He may have devised a different and novel method of dealing with the material, which is an improvement. The issue concerns the commercial worth of the new technology that was devised before the NDA was involved. How far is it necessary to disclose that at the point at which one is beginning negotiations with the NDA or when the NDA is beginning negotiations with the company? That bothers me.

Lord Jenkin of Roding: I am grateful to my noble friends who have spoken in support of the amendment. It seems that we are leaving out of account one very crucial aspect, which is that anything that a site licensee does on the site, or that he requires his contractors to do, will have to be approved by the regulator—the Nuclear Installations Inspectorate. It maintains the closest watch over what is done.

I hark back to when my noble friend Lady Miller of Hendon and I were in Harwell. We saw what the UKAEA had done with its sites, which, for the most part, were far smaller than a large power station. We asked, "Do you have the regulators, as it were, peering over your shoulder?" The answer was, "Absolutely—all the time. They are resident on the site. They have to approve everything we do". So it is not as though safety is in jeopardy.

If a regulator says, "You cannot make the transfer unless you transfer this information", clearly that is a matter that the Secretary of State would have to take into account. It may well be that processes are in place or that discoveries have been made, approved by the NII, concerning the best way to handle material, whatever it might be. It may say, "That is one way of doing it; there may be other ways". In those circumstances, it would be unduly harsh to require the information to be passed on automatically.

Looking further ahead, the Minister is quite right to say that there will be a whole series of other contractors—but not BNFL—who have been successful and who, in their turn, will need to pass on the information. This kind of clause might be more acceptable to the Minister and to the department if there were a clear requirement—this provision may require some redrafting on Report—that safety should at all times be one of the paramount considerations in deciding whether or not something is necessary. If that were the case, one would have to accept that it was necessary. We shall need to think about this matter but, to my mind, it is clear beyond peradventure that something needs to be done.

I am grateful to the Minister because he recognised that there is a problem here. I believe that we can deal with this matter when we return to it on Report. Meanwhile, I think that both parties should brood on the matter. Perhaps there should be more negotiations. All I can say to the noble Lord is that it has been impressed on me that this is a matter of great

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importance to those who will be participating in the processes set up under the Bill. I do not believe we should just let the matter go; we shall need to return to it and try to satisfy ourselves that there is a workable way of protecting valuable commercial property while ensuring the integrity and safety of the systems used.

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