Clause 13 - Powers for carrying out functions
Energy Bill [Lords]
10:30 am

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

I beg to move amendment No. 61, in

clause 13, page 11, line 3, leave out from first 'the' to first 'to' in line 4 and insert

'Secretary of State may by order subject to the affirmative resolution procedure grant the NDA such powers (in addition to those contained in subsection (2)) as appear to him'.

Mr Jonathan Sayeed (Mid Bedfordshire, Conservative)

With this it will be convenient to discuss the following amendments: No. 62, in

clause 13, page 11, line 6, leave out 'include, in particular' and insert

'set out in this subsection are'.

No. 64, in

clause 14, page 12, line 13, at end insert—

'(2A) Where, as a result of consideration under subsection (2), the NDA decides that it requires powers additional to those conferred by section 13(2), it shall inform the Secretary of State of that decision immediately.'.

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

These amendments relate to the powers of the NDA, but in particular the opportunity that it has to change those powers. I regret that my hon. Friend the Member for South-West Hertfordshire is not here, because these are what he would call probing amendments. Therefore, I will not take too much time over them. I would like the Minister to explain why the NDA might want to exercise or change its powers. I am slightly alarmed by subsection (1), which states:

''The NDA shall have power, for the purpose of carrying out its functions, to do all such things as appear to it to be likely to facilitate the carrying out of its functions, or to be incidental to carrying them out.''

That seems a little wide, so I seek to amend it. I also seek to require the NDA to present to Parliament its reasons for changing its powers. I hope the Minister can reassure us on this issue.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

I hope that I can provide the reassurance that the hon. Gentleman seeks. Clause 13(1) provides the NDA with all the general powers necessary to carry out its functions or which are incidental to so doing. The drafting is quite normal in that respect. Subsection (2) serves to identify specific powers, which might not be thought to fit within the general provision, to provide clarity. The amendments would reverse that arrangement by implying that the only powers the NDA has are those in subsection (2), which should be added to only by order, subject to affirmative resolution.

I accept that these are probing amendments, but I think the hon. Gentleman would agree that bodies established by legislation should be given the powers necessary to perform their functions in that legislation. We should not later have to introduce secondary legislation to allow the body to function. If the amendment were to be accepted without an order immediately being made, the NDA could operate a non-nuclear generating station such as Fellside under subsection (2)(a), but it could not do any of the routine things, such as leasing buildings and purchasing IT, that would be necessary for it to operate.

I hope that the hon. Gentleman is reassured by my explanation of subsection (1) and the more specific list in subsection (2), and that he withdraws the amendment.

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

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

I beg to move amendment No. 25, in

clause 13, page 11, line 7, at end insert

'which are in operation at the time that this Act receives Royal Assent and subsequently acquired by the NDA'.

Mr Jonathan Sayeed (Mid Bedfordshire, Conservative)

With this it will be convenient to discuss the following:

Amendment No. 95, in

clause 13, page 11, line 7, at end insert

'but not to construct new nuclear generating stations or reprocessing facilities'.

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

This is a simple but important amendment. I do not want to pre-empt what the hon. Member for Brighton, Kemptown will say about amendment No. 95, which has the same objective as my amendment. We are trying to achieve the same thing by different routes.

The Committee has had long and ultimately fruitless exchanges on new nuclear build, whether the Bill as drafted could lead to the construction of new nuclear power stations and whether the public purse could end up meeting their decommissioning costs. You will be relieved to hear that I do not intend to go over the arguments again, Mr. Sayeed, as they have already had a fair airing in the Committee. I will probably fail to convince the Minister yet again that this is a matter of great concern, and he will fail to convince me that that is not the case.

Clause 13 gives the NDA a power to operate electricity generating stations—I will presume that that refers purely to nuclear power stations so as not to set another hare running—but whatever the Minister may say about the economics of the situation, it has been said time and again that various clauses leave possibilities open. This is another such clause, as subsection (2)(a) does not specify that only existing nuclear power stations are at issue.

I remind the Minister that last week, in response to my intervention on the issue, he said:

''I assure the hon. Gentleman that the NDA's running of power stations will be limited, in the nuclear case, to the Magnox situation, with a defuelling and decommissioning programme being established. The role of the NDA is about decommissioning.''——[Official Report, Standing Committee B, 20 May 2004; c. 39.]

That is fine and well, but it is desirable that it should be made plain in the Bill. The amendment would achieve that objective by making it clear that only existing stations, which are up and running when the Bill comes into force, would be run by the NDA. The Minister could have no objection to that eminently reasonable suggestion, but I am not holding my breath in anticipation.

Dr Desmond Turner (Brighton, Kemptown, Labour)

I guess that my amendment No. 95 has broadly the same aim, but it is more about the avoidance of doubt. It is as simple as that. I am satisfied that the Government do not intend for the NDA to go around commissioning new nuclear stations, but even if it did, that is not in itself particularly sinister. The really important matter is whether a new nuclear installation is commissioned, whoever commissions it. The responsibility for future decommissioning costs is clearly important too, and I would not wish it to fall on the public purse.

Although I know that it is not the Government's intention that the NDA should commission new nuclear installations, the Bill seems to allow it to do so. The purpose of the amendment is to make it clear that that is not the case. It is about drafting, the avoidance of doubt and confirming the Government's intention, making it clear to everybody concerned, including the hon. Member for Lewes.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

It may help if I start by saying that subsection (2)(a), which is the target of the amendment, provides the NDA with the power to operate only non-nuclear electricity generating stations. The operation of nuclear power stations pending decommissioning is already covered in clause 6(1)(a), which we have debated. Clause 13 cannot override the limitation in clause 6, which specifies the circumstances under which the NDA can operate nuclear power stations.

Subsection (2) cannot be construed as extending the NDA's powers in respect of its principal functions, including the constraint that it is allowed to operate only nuclear generating stations pending decommissioning. Subsection (2) lists powers that we consider might not be thought to fall within the general powers identified in subsection (1), but which may be necessary for the NDA to carry out its functions. I assure my hon. Friend the Member for Brighton,

Kemptown and the hon. Member for Angus (Mr. Weir) that the NDA will not be building and running nuclear power stations, even if there was a decision to pursue the nuclear option in the future. I hope that that is helpful.

There are two problems with the effects of amendments Nos. 25 and 95. Subsection (2)(a) is intended to cover the power to operate non-nuclear electricity generating stations that are necessary for or inextricably linked to nuclear sites. Such stations include the Fellside combined heat and power plant, which supplies essential steam to the Sellafield site, and the Maentwrog hydroelectric plant in north Wales, which supported operations at the Trawsfynydd Magnox station. Amendment No. 25 would prevent the NDA from operating any power stations built in the future, such as one to replace Fellside, or any power stations attached to sites that are designated to the NDA in the future. That could unhelpfully restrict the NDA's ability to secure the proper operation of a nuclear site.

On amendment No. 95, I caution against preventing the NDA from being able to build any new reprocessing facilities, given the long time scales, about which we have spoken. It would be unwise to remove that from the range of options available to the NDA in delivering its objectives. Indeed, clause 7(4) enables the NDA to be given the responsibility for building facilities, including reprocessing facilities. However, the NDA is allowed to do that only to the extent that such action is necessary to carry out its responsibility to secure the treatment, storage, transportation or disposal of hazardous material. Given those assurances, I hope that the amendment will be withdrawn.

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

I must confess to being somewhat astonished at what the Minister just said. We seem to have witnessed a massive expansion of the possible role of the NDA in the course of one speech. I am not satisfied with what the Minister said. We have discussed clause 6 and there is nothing in the Bill to prevent the NDA from continuing to run nuclear or any other power stations for as long as it wishes. I would like to press the amendment to a vote.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 10.

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

I beg to move amendment No. 63, in

clause 13, page 11, line 34, at end insert—

'(2A) Where any BNFL installation is designated under section 6, in deciding how best to carry out its functions at that installation, site or facility, the NDA shall provide BNFL with the opportunity to bid for a contract to carry out any decommissioning, or any other, work which BNFL considers it to be competent and qualified to carry out, and the NDA shall give due consideration to such a bid.'.

This is, I suppose, a probing amendment, but it is also a little more than that. Two issues motivated it. The first is the importance to BNFL of the work that it does, and particularly to the west Cumbria area, given the economic benefit that it brings to what is a disadvantaged area. The second is that BNFL has a range of skills and expertise, as does the United Kingdom Atomic Energy Authority. The purpose of the amendment is to make those points and to probe the Minister on how he envisages the process working when the NDA does not physically carry out the work and contracts other people to do it. The amendment is an attempt to make the point that it is important to BNFL to be able to bid for that work, but also to ask the Minister to explain how he sees the process working.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

I can certainly give the hon. Gentleman an assurance that any bid made by BNFL to manage an NDA site will be considered along with any others received. I think that he would accept that for competition to work, as we hope it will in this area, it needs to be open and fair. We want to encourage new competitors to enter the market and so increase the chances that the NDA will achieve the goal of site management competition that secures the best skills for the job and achieves clean-up as efficiently and effectively as possible. BNFL will be free to compete for site management contracts that will entail ownership of the site licensee company that retains control of the site for regulatory purposes. However, the hon. Gentleman will probably agree that it would not be appropriate to refer, as the amendment does, to one particular current site operator—BNFL. That would send a signal to the market that there is not a level playing field. We want new competitors to feel that they have just as much of a chance as BNFL, and making a specific reference to BNFL would be unhelpful. My view is that BNFL makes a large and important contribution, and I am certain that it will continue to make that contribution for a long time to come, winning work on the basis of its undoubted skills and excellence.

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

The fact that we have had a very short debate on this issue does not in any way mean that it is not important—it is extremely important. The Minister has given me the assurance for which I was looking, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

I beg to move amendment No. 113, in

clause 13, page 11, line 34, at end insert—

'(2A) The power under subsection (2)(d) may not be exercised for the benefit of companies that operate nuclear installations or designated facilities for treating or disposing of hazardous material.'.

Mr Jonathan Sayeed (Mid Bedfordshire, Conservative)

With this it will be convenient to discuss the following amendments: No. 114, in

clause 13, page 11, line 34, at end insert—

'(2A) The power under subsection (2)(d) may not be exercised for the benefit of BNFL or British Energy.'.

No. 115, in

clause 13, page 11, line 34, at end insert—

'(2A) The power under subsection (2)(e) may not be exercised for the benefit of nuclear companies except where the full cost is recovered from those companies.'.

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

I am back again on the question of financial propriety, which I am keen to pursue. I take the view that there ought to be a clear delineation between the NDA and the private sector nuclear industry for reasons of good accounting practice, the safeguarding of public money and transparency—all concepts that the Minister would endorse.

The amendment is partly probing and partly rather more. I wish to explore the areas in which grants or loans might be made available under the powers in clause 13(2)(d) and (e). Unless the Minister convinces me otherwise—as he knows, I am always open to reason—it would seem illogical to give grants and loans to the private sector nuclear industry under powers relating to research and site clean-up, because the industry itself, as the Minister has said on previous occasions, has responsibility for cleaning up its own sites. British Energy is a self-contained, private sector company that has a duty to deal with its assets and liabilities. Only in the event of market failure should the taxpayer pick up the bill and support it. That seemed to be the Minister's view, based on earlier discussions of the Bill.

It would muddy the waters—I use the phrase again because, unfortunately, the Bill demands it on many occasions—if there was an incestuous relationship and grants and loans were transferred from the NDA to British Energy, particularly given the inevitably close relationship that will exist between the NDA and the private sector, and given the nature of the nuclear industry. The Minister was not keen to accept the idea that there should be space between the NDA and those who were employed in the nuclear industry and who could be employed two days later by the NDA. He rejected earlier amendments to that effect.

It is important that there are clear lines of financial accountability. My amendments to paragraphs (d) and (e) explore such matters. In particular, I draw the Minister's attention to amendment No. 115, which states that the power in paragraph (e)

''to use its facilities, and facilities on designated sites, for the carrying out of research on behalf of others''

should be amended such that it

''may not be exercised for the benefit of nuclear companies except where the full cost is recovered from those companies.''

That seems entirely reasonable. It would protect the public purse and ensure transparency.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

The hon. Gentleman suggested, if I understood him correctly, that the amendment was aimed at British Energy. However, as it is phrased, it goes wider than that. Indeed, there is an explicit reference to BNFL in amendment No. 114, so the effect of the amendments would be somewhat different from what he has indicated.

The NDA has the power to fund research into nuclear clean-up and other functions. What is important is that it is limited to funding the research that it needs to carry out its functions. I would be much more relaxed about who is carrying out the research, given that the purpose and the function of the research are key. In practice, it is likely that most of the expertise that the NDA would wish to draw on will be found in the very organisations that the amendments would exclude. Universities carry out important work in this area, but the vast majority of relevant nuclear research skills are in BNFL.

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

I fully accept that there will be a call for established nuclear skills, which are often present in BNFL, British Energy or universities. I do not have a problem with contracts being entered into on a proper basis and being subject to financial audit. However, clause 13(2)(d) refers to ''grants or loans'' rather than proper contracts.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

A grant for research would be given on a basis with which the hon. Gentleman says that he is comfortable. His amendments would prevent such contractual relationships being entered into as will be necessary for the NDA to fund research. The NDA's interest will be in securing research output that makes the best contribution to the successful pursuit of its functions. It should not be constrained by these amendments. From what he just said it appears that he accepts that.

Amendment No. 115 would stop the NDA making its research facilities available for nuclear companies except under full cost recovery. I am not sure what a nuclear company is, but by imposing that constraint the amendment could prevent the NDA from securing the research output it needs to carry out its functions, or from maximising its income through the lease of its research facilities, which might be attractive in some circumstances. Insisting on full cost recovery could result in NDA facilities not being used to their full extent, which would be to the detriment of the NDA.

On Second Reading and in another place, debates focused heavily on what we are doing to keep the nuclear option open. The hon. Gentleman is not as concerned about that as others are, but with responsibility for some unique nuclear research facilities in the UK, the NDA will play an important role in facilitating research into our nuclear future. In an intervention on the hon. Member for Tewkesbury, I made the point that a key element in keeping the nuclear option open is to ensure that we continue to engage in nuclear research. An amendment that would prevent such research by nuclear companies except on the basis of full cost recovery, even if it would

otherwise benefit both parties involved, would be unhelpful. On that basis, I hope that the hon. Member for Lewes will withdraw the amendment.

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

Let me say at the outset that I will withdraw the amendment, not least because of time constraints. However, I am not entirely content with the Minister's response. To come back to the point made by the hon. Member for Brighton, Kemptown, I am not accusing the Government of a policy of deception. I do not believe that they are presenting a Bill that deliberately obfuscates the truth or pushes through a hidden Government agenda. My concern is that the Government's energy policy, which I largely agree with, is not mirrored by the terminology of the Bill. It is my genuine intention to be a critical friend of the Government.

Clause 13(2)(d) refers to ''grants or loans''. The Minister and I do not have a problem with the contractual relationship between the NDA and other elements of the nuclear industry to fund research, particular if that research is into decommissioning and clean-up operations; that is not only desirable, but inevitable.

I would suggest to the Minister that his intentions and my acceptance of those intentions could be interpreted differently because of the word ''grant''. He may think that the word can be used solely in the sense of university grants. However, I would suggest that the word has a wider meaning, and that it must be tightened up if the Minister wants to limit the NDA's ability to enter into contractual arrangements with, and provide support to, universities and external bodies. ''Grant'' has a much wider meaning, which may not reflect the Government's intention, but which could subsequently be used by those with a different policy from the one that the Minister is espousing.

That is the issue that I am trying to draw to the Minister's attention. I do not think that we disagree about the principles behind the clause or, indeed, much of the Bill; I do, however, disagree with the wording.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

I accept that this is largely a matter of wording, and if the hon. Gentleman agrees that it is appropriate for the NDA to commission research from British Energy or BNFL, there is no distinction between us. However, the amendment would prevent the NDA from doing so.

Norman Baker rose—

Mr Jonathan Sayeed (Mid Bedfordshire, Conservative)

Order. We have until the close of play this afternoon to reach the end of clause 83? I would therefore be grateful if hon. Members kept their remarks strictly to the point.

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

I hope that I am doing that, Mr. Sayeed. I am conscious of the time scale.

I do not disagree with the Minister's intentions. Technically, he may be right that the amendments—this is one reason why I shall not press them—would have an unwanted effect. He does not want that, and nor do I. However, the wording that I seek to amend

may also have an undesirable and unwanted effect, which he has not anticipated, and he may live to regret that if the provisions are used in an unhelpful way. I ask to him to reconsider the word ''grant'' to ascertain whether it is open to a wider interpretation than the one that he intends.

It is important that the NDA commissions research that is commensurate with its decommissioning and cleaning-up functions. I would be slightly alarmed by the Minister's comment that it will be doing research into the nuclear future if that future revolved round research into new generation rather than decommissioning and clean- up.

Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)

Clause 13(2)(d) makes it clear that we are talking exclusively about decommissioning and clean-up, not the other issues to which the hon. Gentleman referred.

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

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: No. 16, in

clause 13, page 11, line 44, leave out subsection (5).—[Mr. Timms.]

Question put, That the amendment be made:—

The Committee divided: Ayes 12, Noes 3.