Mr Norman Baker (Shadow Secretary of State for the Environment, Environment, Food & Rural Affairs; Lewes, Liberal Democrat)

I beg to move amendment No. 84, in

clause 8, page 6, line 14, leave out 'may' and insert 'will'.

Mr Bill O'Brien (Normanton, Labour)

With this it will be convenient to discuss the following amendments:

No. 85, in

clause 8, page 6, line 15, at end insert

'commensurate with an estimate of the financial liability being adopted by the NDA'.

No. 116, in

clause 13, page 11, line 35, leave out 'may' and insert 'will'.

No. 117, in

clause 13, page 11, line 36, at end insert

'commensurate with an estimate of the financial liability being adopted by the NDA'.

No. 118, in

clause 13, page 11, line 41, leave out subsection (4).

No. 99, in

clause 24, page 22, line 42, at end insert—

'(4A) In the case of a designated installation, site or facility where the person in control is not one contained in subsection (2), the NDA shall carry out an assessment of the ability of the person in control to cover the costs of the decommissioning and clean-up work, which the NDA considers necessary due to nuclear

contamination caused by the activities of that company, and present such an analysis to the Secretary of State, and the NDA, following consultation with the Secretary of State, shall then determine how the costs of the decommissioning and clean-up work shall be covered.'.

Mr Norman Baker (Shadow Secretary of State for the Environment, Environment, Food & Rural Affairs; Lewes, Liberal Democrat)

We have established that the NDA can take responsibility for the liabilities that arise from British Energy—that has become clear from our discussion on the group of amendments that included amendment No. 78. In response to an intervention from my constituency neighbour, the hon. Member for Brighton, Kemptown, the Under-Secretary said that the private sector would bear the costs of any clean-up. However, he said to me that we must give the NDA power to deal with the private sector because the Government are the body of last resort in the interests of security and the environment. We would all agree with that, so there is a conflict between the last-resort position that the Under-Secretary described to me and the categorical assurance that he gave to the hon. Member for Brighton, Kemptown.

Happily, the amendments in this group would help the Under-Secretary. Clause 8(2) refers to:

''A direction giving the NDA responsibilities in relation to an installation'',

including one in which

''the NDA is to have a financial responsibility under section 24''.

Under those circumstances, the direction ''may''—not will—

''require the person with control of the installation, site or facility''—

that could be British Energy or another private sector operator—

''to make payments to the Secretary of State.''

If the Under-Secretary genuinely intends the private sector to bear the costs of the clean-up, I can help him because amendment No. 84 would replace ''may'' with ''will''. That would absolutely clarify the matter. In addition to that, amendment No. 85 would add the phrase

''commensurate with an estimate of the financial liability being adopted by the NDA'',

which is exactly what the Under-Secretary is saying.

Mr Michael Weir (Spokesperson (Environment & Food; Health; Rural Affairs; Trade & Industry); Angus, Scottish National Party)

Is there not a problem that British Energy has had to be bailed out to the tune of many millions of pounds because it is uneconomic? What guarantee do we have that any future private sector operator will be able to make payments, unless there are segregated funds from the outset? Are we not giving out the ultimate blank cheque? The Government or the NDA will have to pick up the bill if any private operator is in the same position as British Energy was before the Government pledged money to it.

Mr Norman Baker (Shadow Secretary of State for the Environment, Environment, Food & Rural Affairs; Lewes, Liberal Democrat)

That is exactly right. The Under-Secretary giveth and the Under-Secretary taketh away, but recently he has been doing more giving than taking away in the nuclear industry. An amendment tabled by the hon. Member for Brighton, Kemptown dealt with segregated funds but it was not selected. I hope that we can return to that issue later because we want financial clarity; we do not want smudges and

blurred lines involving billions of pounds of public money, which is the situation that the Under-Secretary is creating through this Bill.

This is the ultimate blank-cheque clause. It tells a private sector operator, ''Don't worry about it. The Government are the body of last resort. If we get into trouble they will bail us out, as they have done in the past, and as they continue to do.'' The facilities that were made available to British Energy by the Department of Trade and Industry are still being made available. A huge amount has been made available in the past 12 months on that basis, and there is no guarantee in the clause that that situation will not arise again.

Indeed, clause 8 explicitly allows that to happen. Far from drawing a line under the use of public money to bail out the nuclear industry, which has happened so often, and starting with a clean sheet of paper, which I thought was going to happen under the Bill, we are perpetuating that practice. An opportunity is being provided for the private sector to have the Government contribute to its costs.

The hon. Member for Tewkesbury and his hon. Friends think that nuclear power has a future. If it does, I think that they are honest enough to say that it should wash its own face, and be clear on its financial contribution and accountability. That is not what the clause provides for. My amendments would prevent the taxpayer from effectively handing over more cash to British Energy.

Mr Laurence Robertson (Shadow Minister, Economic Affairs; Tewkesbury, Conservative)

I want to speak briefly in support of the amendments tabled by the hon. Member for Lewes, and in support of my amendment No. 99. It relates to clause 24, which covers the financial responsibilities of the NDA.

It is obvious to the Committee, although I will restate it, that I do not come from the same position as the hon. Member for Lewes with respect to the nuclear industry. It has made a valuable contribution and there remains one for it to make in the future. However, I agree with him that it needs to be economic. I agree, too, with what I think he is getting at in his amendments. Certainly, amendment No. 99 is intended to ensure that where there is a liability—let us say that British Energy has a liability for waste, clean-up and decommissioning—there should be an obligation, as far as possible, to deal with that liability.

A conflict seemed to arise in discussion earlier. The Under-Secretary appeared, when I challenged him about the EU position, to be saying that the Government were prepared to bail out—in the words of the hon. Member for Lewes—the private sector in the nuclear industry. Otherwise, why were we discussing whether that would be unfair state aid? The Under-Secretary seemed to be willing that that should happen. Perhaps in some circumstances it might be necessary. However, it now seems that we are being told that it will not happen, but that it will be up to the licensee, the operator of the site, to pay. We need clarification. I thought so when I first read the Bill and, after the debate, I am even more convinced of it. Therefore I am happy to support the amendment.

Mr Nigel Griffiths (Parliamentary Under-Secretary, Department of Trade and Industry; Edinburgh South, Labour)

I am resisting the amendments—although I appreciate the clarity with which hon. Members have put very straightforward cases—because they would require private sector operators, as a matter of statute, in all cases to meet the costs of discharging their nuclear liabilities. We are clear about one thing: private sector operators must bear the costs of clean-up and should provide for them, for instance by using segregated funds. The question is what should happen if the operator fails—if the ''polluter pays'' principle fails, as it sometimes does in the real world. Circumstances can arise in which private sector operators are unable to meet their liabilities. British Energy provides a current example.

The Government are faced in those circumstances with a choice between leaving such an undertaking to founder and possibly collapse, or coming to its assistance for the good of our communities and of society. When it comes to discharging nuclear liabilities, there is no real choice: a responsible Government bear the ultimate responsibility for ensuring public safety.

What we have here is a Government proposal embedded in the Bill that takes that responsibility in full, compared with amendments that I fear would lead us down the road of irresponsibility. The irony is not lost on me, as the Under-Secretary with responsibility for nuclear decommissioning elsewhere. We have set up a half a billion pound fund, which is currently helping to dismantle Russian nuclear submarine facilities. I was in Archangel earlier this year to see how that was proceeding. We have a fund that is helping another nation meet the responsibilities that we must all meet as a world community, yet we are being asked here to accept amendments that would close the door on that in this country. That is why I reject them.

The clean-up of private sector nuclear sites is the responsibility of the operator concerned, so where the NDA is to be given responsibility for a private sector site, we would expect it to charge for that clean-up. Any decision to support a private sector operator in consideration of the Government's ultimate responsibility for the safe and secure clean-up of nuclear sites would be a matter for Government, not for the NDA. Such support, as in the case of BE, would, as I have said, be likely to be subject to state aid approval by the European Commission. I do not think that we can be clearer on the matter, and I hope that, having heard the consequences of the amendments, no responsible hon. Member or political party would want to walk away and leave clean-ups to the private sector in all circumstances. That is why I ask for the amendments to be withdrawn.

Mr Laurence Robertson (Shadow Minister, Economic Affairs; Tewkesbury, Conservative)

I largely agree with the Under-Secretary, who made his case reasonably and persuasively. However, I point out to him that my amendment No. 99 is a little more accommodating than those tabled by the Liberal Democrats—although I support those too. My amendment took a slightly different line, which is why it relates to a different clause.

Clause 24 appears to suggest that the NDA cannot charge the private sector. That was my reading of it, which is why I tabled amendment No. 99, which says that

''the NDA shall carry out an assessment of the ability of the person in control to cover the costs of the decommissioning and clean-up work, which the NDA considers necessary''.

It goes on to say that the NDA

''following consultation with the Secretary of State, shall then determine how the costs of the decommissioning and clean-up work shall be covered.''

So my amendment would not have been in conflict with what the Under-Secretary very reasonably said. However, I accept his persuasive arguments, and I shall not push the matter to a vote, although it would not necessarily have been detrimental to the environment and public safety.

Mr Norman Baker (Shadow Secretary of State for the Environment, Environment, Food & Rural Affairs; Lewes, Liberal Democrat)

I follow the hon. Member for Tewkesbury and have equal sympathy with the point that he has just made and with amendment No. 99 in his name. The Under-Secretary's main argument against the amendments—that there is no provision for the Government to be the body of last resort—has some validity and I concede that he has a case. It is certainly the case that if a nuclear company went bankrupt and there were a problem, the state would have to intervene for environmental health reasons. That underlines the costs of the industry over generations to the public purse. However, the clause does not specify that the payment will not be required only under such circumstances. In fact, the clause is much looser than that and simply says that a direction

''may require the person with control . . . to make payments''.

We have heard the Minister's interpretation of that. Most people would agree that the state should intervene when an installation or a company goes bankrupt, but that is not what happened with British Energy in the last 12 months or so. He has referred to that case, in which the Government provided a substantial, fat lifeline to prevent the market from reaching the logical conclusion—British Energy should have gone bankrupt in the last 12 to 24 months. Had the NDA existed then, it could have stepped in and either run those stations, because the Government would have given it the power to be generator, or decommissioned them.

Instead, the Minister's policy is to allow private sector companies with nuclear generation capacity to exist. The Government have endorsed that philosophical decision, which was originally a Conservative policy. If the private sector is involved in the nuclear industry, however, surely it should take the risks. It is difficult to justify allowing the industry to receive the benefits of privatisation—money for shareholders and so on—but letting the risk remain with the state. That is the position the Government have constructed.

If the Minister proposes an amendment on Report that says that the requirement to pay on such directions will be made in all circumstances except

when the nuclear company in question has gone bankrupt—at which point the state must intervene for public health and environmental reasons—I will be sympathetic. I am afraid, however, that the clause's wording is loose and can be interpreted much more generously. Such has been demonstrated by what the Government have been prepared to do in the last 24 months.

Clause 8 is a blank-cheque clause. It is an opportunity for more state aid and for any nuclear company to hold a pistol to the Government's head and say, ''We are in financial trouble—we're going down the plughole unless you come up with some more money.'' Government Members ought to be aware that they will be voting for more state aid for British Energy or private sector nuclear companies.

The Minister has said that there is a requirement for a last-gasp body of last resort—the Government—in the event of a company going bankrupt. For that reason alone, I will not press the amendment to a vote. However, I shall table an amendment on Report that frames the provisions in such terms as to allow only failure to pay in the event of a bankruptcy and no other circumstances. If the Minister is true to his word, he will support it. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr Laurence Robertson (Shadow Minister, Economic Affairs; Tewkesbury, Conservative)

In a sense, Mr. O'Brien, we have already discussed amendments Nos. 53 and 54. Amendment No. 54 refers to the revocation of a direction, but as I could not persuade the Committee to put directions before Parliament, I do not suppose that I am likely to gain support for putting the revocation of a direction before Parliament. Therefore, I do not wish to move amendment No. 53.

Question proposed, That the clause stand part of the Bill.

Mrs Anne McIntosh (Shadow Minister, Environment & Transport; Vale of York, Conservative)

The Minister will be aware that the tone of responses to the Government's consultation was overwhelmingly welcoming on the issue of funding arrangements for the NDA. However, two responses expressed concern about whether British Energy could afford to make its increased payments to the nuclear liabilities fund. How have the Government satisfied themselves that British Energy will be able to do so? The matter was alluded to when the hon. Member for Lewes commented on a company going bankrupt. Obviously, the company would have a serious concern.

To be frank, the clause, not having been amended, is not the most elegant or tidy. Will the Minister explain how it will work? Will it mean that work will be commenced only so far as funds are available to pay for it? Will it mean that an up-front payment will have to be made before the work starts or merely that a direction will require appropriate ongoing charges to be imposed by the NDA? Some guidance would be helpful. If authorisation is given for the work to start, would it proceed only to a predetermined interim stage

or could it all be concluded? I have read the responses to the Government consultation, and some real concerns were expressed.

The clause will empower the Secretary of State to make a number of directions. Every time we call for such directions to be scrutinised, we are accused of imposing a tier of regulation, but the fact that we privatised the energy sector and utilities should speak for itself. Will the Minister satisfy the Committee as to why, if the directions are in order, the Government are so afraid of parliamentary scrutiny? Is it not a concept to which the Government are wedded?

Mr Nigel Griffiths (Parliamentary Under-Secretary, Department of Trade and Industry; Edinburgh South, Labour)

I want to make a couple of points in response to the hon. Lady and the hon. Member for Lewes. We are faced with a choice: no state aid or Government intervention and funding in the public interest when they are needed. If that is the defining issue, we stand by the latter.

Much mention has been made of bankruptcy, and if the Government need to step in, doing so early to prevent a bankruptcy, as has been the case with British Energy, may be more cost-effective than picking up the pieces afterwards. This is not a case of, ''Where there is blame, there is a claim.'' A claim against a bankrupt company would be of little comfort to the public, the work force and all others who are concerned with public safety.

Mr Norman Baker (Shadow Secretary of State for the Environment, Environment, Food & Rural Affairs; Lewes, Liberal Democrat)

The Minister talks about the downsides of bankruptcy, but, as we have discussed, does he not accept that the Bill gives the NDA the power to operate nuclear stations? Therefore, there need be no effect on the work force, safety or security? Matters could carry on as normal; the only difference would be that we would not be paying out to shareholders.

Mr Nigel Griffiths (Parliamentary Under-Secretary, Department of Trade and Industry; Edinburgh South, Labour)

The question is, which is the best authority to maintain and run the specific site? I put it to the hon. Gentleman that there may have been a recent change of management, those responsible for the mistakes may have gone and the new team would be the best people to manage the facility, although, after NDA vetting, they may require financial support to do it. His amendments and his rejection of the clause would close the door on that, which is an important difference between us.

The hon. Gentleman is right, through the amendments he has tabled, to probe the Government on the exact meaning of the Bill, but he has clearly stated that he does not want any state aid to be allocated to the maintenance of such facilities. I do not know whether he has a response to my point: a new and highly experienced management, who have perhaps run another nuclear facility well, might be brought in by the company.

If the hon. Gentleman is arguing that in such a situation there is a clear choice between the NDA—a public body—running the organisation or public money going to a private sector organisation, even if that organisation has a good, proven track record, that exposes weaknesses in the amendments he tabled, albeit in good faith.

Mr Norman Baker (Shadow Secretary of State for the Environment, Environment, Food & Rural Affairs; Lewes, Liberal Democrat)

The Minister mentions a track record, which reminds me of Railtrack. Railtrack was a private sector company that the Government could not afford to allow to go bankrupt because it was delivering an essential public service—railways—so Railtrack repeatedly came back to ask for more public money.

Railtrack said that it had got everything sorted out and that the management had improved, which is what the Minister says, but in the end the Government had to pull the plug and say, ''No more.'' I suggest that as long as he allows that argument to be made by the nuclear industry—by private companies such as British Energy—those companies will keep coming back for more money. At some point, however, the Government will again have to say, ''No more,'' and hand the industry over to the NDA, as Railtrack went to Network Rail.

Mr Nigel Griffiths (Parliamentary Under-Secretary, Department of Trade and Industry; Edinburgh South, Labour)

There is an implication in what the hon. Gentleman says that there is some wonderful pool of experts available on tap who can come in and sort out the problems of the industry. In fact, although such expertise resides in the UK as much as anywhere else in the world, it resides in a core of key people. One cannot just advertise in the local jobcentre for people to come and take over such facilities.

It is therefore important that the clause stand part of the Bill, on the basis of the arguments that we have advanced. I recognise the sincerity with which the amendments were introduced, especially amendment No. 99, which I will briefly discuss.

That amendment would leave it to the NDA to determine how the costs of decommissioning and clean-up work should be covered, but I cannot support the removal of that responsibility from the Secretary of State. I do not think that a convincing case has been made for transferring those responsibilities to the NDA. Those functions should be kept clear and separate.

Mr Laurence Robertson (Shadow Minister, Economic Affairs; Tewkesbury, Conservative)

The Minister refers to the amendment rather selectively. It states that the NDA shall

''present . . . an analysis to the Secretary of State, and the NDA, following consultation with the Secretary of State, shall . . . determine how the costs of the decommissioning and clean-up work shall be covered.''

Without that amendment, and the amendments tabled by the hon. Member for Lewes, the NDA—in other words, the taxpayer—could pick up the entire bill. I do not understand the Minister's objection to amendment No. 99.

Mr Nigel Griffiths (Parliamentary Under-Secretary, Department of Trade and Industry; Edinburgh South, Labour)

I do not wish to misrepresent the purpose of the amendment—members of the Committee have a copy of it—nor will I pick through it from a legal point of view. I do not disagree with the hon. Gentleman about the wording, but I was trying to focus on the outcome. The difference between us is that we believe that the Secretary of State, who is accountable to Parliament, should take the ultimate decision, rather than the NDA, no matter how valid the consultation with the Secretary of State may be.

Mr Laurence Robertson (Shadow Minister, Economic Affairs; Tewkesbury, Conservative)

The Under-Secretary is extremely courteous in giving way. He is expressing great sympathy for amendment No. 99, although he cannot agree with all of it. Will he therefore reconsider it with a view to accepting a slightly amended version on Report?

Mr Nigel Griffiths (Parliamentary Under-Secretary, Department of Trade and Industry; Edinburgh South, Labour)

If the hon. Gentleman wishes the amendment to retain the last three sentences, which transfer the responsibility from the Secretary of State to the NDA, I will not be able to reconsider it. However, when we agree with them, my hon. Friend and I will look closely and sympathetically at all the amendments on Report.

Mr Laurence Robertson (Shadow Minister, Economic Affairs; Tewkesbury, Conservative)

My point was not about leaving in those three sentences. It may be that we agree that the Secretary of State should have the ultimate responsibility, but the more important part of the amendment states that the NDA shall carry out an

''assessment of the ability of the person in control''

to pay for it. That is what I am getting at. Would the Under-Secretary consider accepting that point on Report?

Mr Nigel Griffiths (Parliamentary Under-Secretary, Department of Trade and Industry; Edinburgh South, Labour)

We will accept any amendment that significantly improves the Bill.

Question put and agreed to.

Clause 8 ordered to stand part of the Bill.