I beg to move,
That this House notes that the publication of the Pathfinder prospectus for the sale of British Energy confirms the suspicions of Her Majesty's Opposition that the sale is a bad deal for the taxpayer; further notes that the proceeds are anticipated to be less than the cost of building Sizewell B whilst the other seven reactors are being given away free, that boardroom pay will rise by 40 per cent. whilst one in 20 employees have lost their jobs in the last year, that it has yet to be demonstrated that the sale proceeds will cover the shortfall in the Magnox liabilities, that the bulk of the initial Segregated Fund to pay for British Energy's clean up costs comes in the form of a `dowry' from the balance sheets of the pre-privatisation publicly-owned companies and that the Government has not sufficiently settled issues relating to the ability of a privatised nuclear industry to compete in the electricity generating industry on an equal footing with other private generators; and condemns the privatisation as a reckless and cynical attempt to raise short term cash at the expense of the long term interests of taxpayers.
The context of this debate, like the one that preceded it, is value for public money and an assessment of where the overall public interest lies.
Only a few weeks ago—following a Select Committee report on privatisation of nuclear power stations, and in the absence of any sign that the Government intended to have a debate on the issues raised by that report—Opposition Members took the opportunity of Opposition time, as we do today, to focus on some issues of public policy over which, as is all too evident, the Government would much prefer to draw a veil.
On that previous occasion, we said that this was an extraordinary privatisation, and that it was extraordinarily difficult to justify. That view is not only maintained but enhanced by the lack of answers to the questions raised then, and by the new information that has since emerged, despite the Government's best efforts to conceal it.
In one respect, this privatisation may be unique. Concerns about whether the taxpayer is getting a good deal have often been raised, but with this sale there are also questions about whether the shareholder is getting the full picture. I accept at once that, at first glance, it seems unlikely—it certainly could be argued that it would be difficult—for anyone to construct a deal that is disadvantageous, first, to the taxpayer and, later, to the shareholder. But I suspect that, if anyone can do it, this Government can.
Before the previous debate, the Government said that a response to the concerns raised by the Select Committee would be available, and would be debated within "the normal time scale". However, as we suspected, it seems that the Government did not intend such a debate to precede the sale.
The Minister's basic case in that debate was that all the questions raised either had been dealt with already or would be dealt with in the prospectus, which we now have available. I shall remind the House of some of those questions.
There is first the issue whether liabilities will follow assets into the private sector—an assertion that the Minister of State has made repeatedly—without it ever being made wholly clear whether that really means all rather than part of those liabilities. It is on that basis that, despite the money that taxpayers have to cough up at the front end of the sale, the Minister claims that this sale is to the taxpayer's long-term benefit. Not only many Opposition Members but many analysts argue that there is considerable risk attached to that aspect of the Government's case.
Revenues to meet those liabilities in the long term are intended, at least in part, to be available from the segregated fund. It is now much clearer—even clearer than it was in our previous debate—that, to offset liabilities assessed on an undiscounted basis at £14 billion, it is anticipated that revenue secured for investment in and by the segregated fund will cover only a sum of the order of £4 billion. It seems to be anticipated that the rest of the liabilities will be covered from the operating revenues earned by the company.
So key to the Government's basic case is the assumption about the company's financial performance in the private sector. In fact, the more we study that case, the more it appears that some of those key questions remain unanswered, and that such answers as do exist might give potential shareholders pause for thought.
To begin with, there is obscurity about the issue of the segregated fund itself. The last Red Book shows a cost to the Exchequer in respect of the industry of some £230 million—precisely the sum that has appeared on the balance sheet of British Energy, and will be the dowry it provides to start off the fund.
It is presumably on the basis of the scale of the dowry from public funds that the level of yearly contribution from the privatised company is assessed at a mere £16 million a year, as compared to previous estimates from City analysts that funding would have to be about £30 million to £50 million a year—more than double, at the very least. I say "presumably", because the Government have, up to now, failed to publish or place in the Library of the House the report that they claim provides the justification for such a low contribution, on the spurious grounds that it is not yet completed. However, that does not seem to have prevented the Government from reaching a judgment on the report.
The potential of the revenue stream for the company and what that means for shareholder returns is also key to the value of the sale. Here too, considerable questions remain unanswered. For a start, in our previous debate it was pointed out that the assumptions that underlay the value placed on the company were heavily influenced by the load factor at which it was argued that the stations to be privatised could be run. It was pointed out in that debate that a load factor of 82.5 per cent. had been assumed—a level which, it was argued, had never been attained, and which few analysts believed could ever be attained.
To put the matter in perspective, we can see in the prospectus a method of presentation of the performance of the advanced gas-cooled reactors which gives a figure for best ever performance of 74 per cent. in 1995. In the year to 31 March 1996, those reactors achieved a performance of just 71 per cent. Despite the fact that that assumption must be crucial to assessing either the value of the sale or the assumptions of future revenues and hence future dividends, the Government are saying little or nothing about how they now view those assumptions. I hope that the Secretary of State will remedy that omission today.
This is particularly relevant because, in the past couple of days, we have learnt of the existence of a legal review of the sale carried out by Clifford Chance, which is said to have been made available to the company and the Government. I hope that the Secretary of State will comment on the matters it raises in this debate, and either publish the legal review or place it in the Library.
I ask that because a document that I have seen, which purports to be a draft of the report, draws attention to two issues that have substantial implications for the commercial aspects of the sale. Discussing design and technical issues, it says:
Several on-going and major generic technical problems either affecting, or potentially affecting the stations
to be privatised are identified. It is said that, in the case of carbon deposition, that may affect output. It is said that the problems may have "high commercial penalties".
The review raises issues of staffing levels, and the need to have sufficient qualified and experienced staff. It highlights doubts about whether that can all be provided, especially if there is to be substantial contracting out of work. Again, the quality of the human capital of the company is said in the report to raise issues with considerable commercial consequences. That is probably because of the assessment that some 60 per cent. of incidents causing loss of output are thought to be due to human error.
Those issues are relevant not just to the value of the company but to the revenue stream that can be anticipated. Yet, from the prospectus, it is obvious that that revenue stream is key to the statement that liabilities will follow the assets and will be covered in the private sector.
Let me remind the House that it is now evident that it is anticipated that some £10 billion of the undiscounted liabilities will be expected to be covered by the company's revenues, so questions about the security of the revenues go to the heart of the coverage of liabilities.
The prospectus raises another question about the degree to which liabilities are following assets. On page 73, the prospectus refers to liabilities falling due after the closure of the existing stations and outside the scope of the segregated fund, so not covered directly by the company's revenues. It says that they will have to be covered by further investments to provide funding to meet the payments as required.
I should be grateful if the Secretary of State could shed some light on what that means. Does it mean that a further segregated fund would be set up, and, if so, does that not suggest that the present fund is inadequate to bridge the gap between liabilities and the income to cover them? Does it simply mean that, apart from the revenue stream having to meet the cost of liabilities which fall while the station is operating, it is also expected that revenues will have to cover sums set aside to provide a further long-term income stream when the stations have ceased to operate? What interests us in the context of the sale is the implications of that statement for the prospect of future dividends.
If the hon. Gentleman has had sight of the report from the independent actuaries, we would like to see it as well, and so would the House. How does he know what the independent actuaries have said? It is not in the Library of the House. Can he cast any light on the matter? Is he claiming to have seen the report?
I am not sure on what basis, as a Government Back Bencher, the hon. Gentleman has this inside track to British Energy. I am sure that other potential shareholders would be delighted to have the same information. He strengthened the case I was making to the Secretary of State for publishing the report. I am sure that the Secretary of State will be able to tell us that he intends to do so.
The prospectus shows that dividend payments from the privatised company may not be covered by profits after tax for a number of years. That brings me to the question of the return for shareholders.
It is hard to know what to make of the extraordinary decision to announce what first year dividend the company will pay, when the sale has not yet taken place. To announce also that the dividend will be about twice the rate of the most optimistic profits forecast for that year so far raises the question what the company is doing promising dividends on such a scale. What makes the whole thing utterly ludicrous is that the dividend is to be paid before potential investors will have had to cough up a second instalment of the price of their shares.
Harold Macmillan once said that selling off state assets was like selling the family silver. The nuclear industry looks like being almost the last item to go in the Tory car boot sale of state assets. As any hon. Member who has read the words of the prospectus carefully will acknowledge, what is on offer here may not be silver—in fact, it looks remarkably like fool's gold.
The right hon. Lady seems to be rather pessimistic about prospects for the shares, and seems to be telling people not to buy them. Can she assure us that her investment advice will be better than that of the hon. Member for Birmingham, Ladywood (Mrs. Short), who told people not to buy Railtrack shares on the grounds that they would go down rather than up? Does she have any comment on that?
If I were a shareholder in either of those industries, I would rather have a longer period over which to judge what might happen to the share price than the right hon. Gentleman seems to be taking into account, which, as has been pointed out, is exactly what the brokers are saying. If the hon. Gentleman is concerned about the advice that we are giving, or believes that the observations that we are making about this potential sale are unsound, I suggest that he takes a further look at what is being said about it in the City.
No, not again. I want to get on, and I do not want the hon. Gentleman to incur another disaster, as he did on his previous intervention.
The company made a loss last year and warns of making one this year, but it still offers a massive dividend payout that seems to have been financed by a bridging loan from Her Majesty's Treasury.
The prospectus suggests that the company's ability to pay dividends at all in future is by no means certain. The directors say in the prospectus that their dividend policy is "critically dependent" on six assumptions, which I shall paraphrase for the benefit of the House.
It is assumed that the pool price of electricity will not fall substantially and that any price review will not affect British Energy's performance; that there will be no major unanticipated station failures; that British Energy will meet its targets, including both extending the life of some stations—running them longer—and making cost savings; that there will be satisfactory returns from reinvestment; that there will be no wider changes in regulation that will have an adverse impact on British Energy; and that there will be no significant rise in inflation.
Those are hefty caveats. It is evident that the assumptions are not only unlikely to be all fulfilled, but that they are mostly entirely outside the control of the directors. The notion that there is unlikely to be any change in regulation or any adverse outcome from the price review is hardly borne out by what has happened with electricity or gas supply.
The hope that there will be no unanticipated station problems is highly dependent, as the legal review to which I referred earlier shows, on some of the technical issues. The prospectus makes it clear that it is possible that unforeseen events or changes in regulatory standards may require the lifetimes of stations to be reduced, yet the background to the dividend policy talks about half of them having their lives extended.
All the assumptions are most heavily dependent on the position in the trading pool in which the price of electricity is set. At present, nuclear power stations have preferential access to that pool. The regulator has previously acknowledged that, if he were asked—for example, by other generators—to review British Energy's access to the pool, he would have to do so. That may in part account for the statement in the prospectus that the regulator has been asked
to avoid making any announcement during the offer of the sale—and for three months after commencement of dealings—other than in exceptional and unforeseen circumstances".
The prospectus also makes it clear that other regulators have been asked to avoid saying or doing things that might affect the price of British Energy shares.
The fact remains that assumptions about what will happen in the pool, and about the effect of its operation on the price of electricity, are crucial to the assumptions that are being made about the dividends that are said to be on offer to shareholders. Shareholders who read in the popular press references to the new opportunities that this sale offers to Sid should bear in mind what has happened to the original Sids, which was itself a direct result of changes in Government policy of which Sid was given no inkling when the Government sold him or her their shares in British Gas.
The sale contains wider and more profound risks than simply commercial ones. In the previous debate, we drew attention not only to the inadequacy of the insurance cover that is being required of the industry but to the fact that it was substantially less, even on the most generous estimates, than that frequently required elsewhere in the private sector—in the chemical industry, for example. That point was made to the Select Committee by the CBI.
The Minister's response in our previous debate was to talk about the narrow nature of any potential liabilities for the industry, as if a major accident—that is what the insurance is all about—would not have a significant impact, because of the restricted nature of the industry. That argument is bizarre. I call on the Government again, as does the private sector, to re-examine the provision that is being made on that. As matters stand, it is yet another area of financial uncertainty—certainly for the taxpayer, and probably even for the shareholder.
Our motion describes this privatisation as "reckless and cynical". I believe that any impartial observer would agree that that description was well-merited. I suspect that the level of hostile comment, and the degree of reservation expressed in the financial sector, is as unprecedented as the nature of this privatisation. There are certainly hidden consequences for the taxpayer. There may well be hidden consequences for the shareholders.
The only clear beneficiaries are the directors, whose total remuneration, according to the prospectus, is to rise by 38 per cent. on average; and a Government who are desperate to raise revenues that they hope can be used to justify a short-term tax cut and who are entirely indifferent to the consequences for the shareholder or the taxpayer in the longer term.
To say that the terms of the sale of the industry are unfair would be a gross understatement. The expected sale price, which is now said to be about £1.7 billion, is about half the cost of building Sizewell B alone. The other power stations have been thrown in for free. It is a tenth of the £13 billion that taxpayers have already laid out from their own pockets to build reactors.
This is not a sale. Ministers no doubt hope that potential shareholders will believe that it is a free lunch. Yet the Government tell us constantly that there is no such thing as a free lunch. Whatever the potential benefits of the sale, the potential losses seem increasingly likely to outweigh them. The Government have long ceased to act in the public interest. The sale may be one of the most blatant examples of their indifference and neglect; it is certainly one more reason why they should be driven from office.
I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
`welcomes the publication of the Pathfinder prospectus for the sale of British Energy which confirms that the sale fulfils the Government's commitment to ensuring that liabilities follow assets into the private sector and is a good deal for the taxpayer who will benefit from equity proceeds, debt repayment and the permanent transfer to the private sector of responsibility for almost £4 billion of nuclear liabilities, for British Energy employees who will now have the opportunity to take a real stake in the future of their industry, for Magnox Electric which will be a robust public sector company capable of meeting its liabilities as they fall due; and further notes that the privatisation of British Energy serves the long term interests of the taxpayer, the industry, and consumers; and condemns the persistent attempts by the Opposition to undermine this and other privatisations.'.
Once again, the Opposition are parading their familiar themes of doom and gloom and of misconception. Time and again, we have listened to Labour Members criticise
any privatisation proposals. When will they learn that such scaremongering has never proved to be correct? The right hon. Member for Derby, South (Mrs. Beckett) quoted the words "reckless" and "cynical" from her motion. They are a good summary of her attempt to undermine the privatisation.
I invite the House to consider first the general picture. It is worth reminding Labour Members that, in 1979, nationalised industries were costing the taxpayer more than £50 million a week. By contrast, in the past financial year, privatised companies paid about £55 million a week into the Exchequer.
The fact that the right hon. Gentleman has barely started does not mean that he has not entered the field of inaccuracy. Will he confirm figures from the Library that show that, at least until last year, the electricity industry had never delivered so much in taxation to the Exchequer since privatisation as it used to in profits before privatisation?
The right hon. Gentleman shakes his head, but that is one of the many facts concealed by all this bombast. The Exchequer got more from the profits of the electricity industry before privatisation than it has from taxation since.
If the hon. Gentleman wants to examine the history of electricity, I remind him that, under the last Labour Government, the price of electricity went up in cash terms by 2 per cent. every six weeks—4 per cent. a quarter, or 16 per cent. a year. I do not think that I need to trade records with the hon. Gentleman.
I take that warning, and assume that it means that there are a few rude remarks to come.
Thje right hon. Gentleman has used those figures before, so I have had them checked, but I have not yet been able to stand them up; I shall keep trying. Even assuming that they are accurate, he might bear in mind the fact that, in the mid-1970s, the price of oil increased by four or five times, which is not insignificant in determining the price of electricity. The Government always ignore that.
A large amount of electricity was generated by coal, nuclear power and water. The right hon. Lady cannot hide behind that argument. The Labour Government's record was appalling. I have quoted the figures that show the cost to the taxpayer of nationalised industries, and the benefit now that they have been privatised.
I had hoped that the right hon. Lady would set out more clearly her party's policies on energy and privatisation. Sadly, I was disappointed, but I should have realised, that on one of the rare occasions on which her party allows to her appear in public, the last thing she would be permitted to do would be to let us hear her views on those matters.
Does she agree with the last Labour Secretary of State for Energy, the right hon. Member for Chesterfield (Mr. Benn), who is, alas, not here to receive the plaudits of the House? He was the man who said:
the Government believe that the nuclear component is necessary for the energy policy of the United Kingdom".—[Official Report, 15 May 1978; Vol. 950, c. 177.]
He commissioned Heysham 2 and Torness, and embarked on the pressurised water reactor programme that gave us Sizewell.
Or does the right hon. Lady agree with the hon. Member for Clackmannan (Mr. O'Neill), who I am delighted to see in his place? He said:
a future Labour Government will not undertake any measures to prolong the workings of those nuclear power stations already contributing to electricity generation"?
Her motion talks of short-termism, but if ever there was a glaring example of short-termism, it is that. How can she have the effrontery to talk of the long-term interests of the taxpayer? What can be more cynical and short-termist than to refuse to extend the life of perfectly useful power stations, as the Labour party's policy proposes to do?
In a moment. I must make a little progress.
The right hon. Lady has made various cynical attempts to undermine the successful privatisation of British Energy, but she has not yet told us what her policy will be next month when the company is sold. Logic dictates that she would want to renationalise it. If so, today provides her and her party with an opportunity to explain her party's position.
The Labour party is often accused of making U-turns. It is true that Labour Members often display a remarkable flexibility of principle. We know, for example, that in government the Labour party set in train a massive programme of building nuclear power stations. In opposition it declares itself against nuclear power and seeks to undermine it with scaremongering. The one thing in which it has been consistent is in opposing every privatisation proposal that the Government have introduced. It is opposed to privatisation, because it is opposed to free enterprise. It does not like freedom, and it does not understand enterprise.
The rest of the world does understand privatisation. Privatisation is one of Britain's biggest export success stories. Germany, Spain, Italy,, eastern Europe, south-east Asia, South America and Africa—all over the world, countries are following Britain's lead and embarking on privatisation in the confident expectation of benefits to the economy and to consumers. The Labour party takes its place along with Cuba and North Korea in the elite group of socialist utopias for which privatisation is still a dirty word.
It is the privatisation, after all, of gas—controlled by the regulator—which has produced such a windfall for consumers. What estimates has my right hon. Friend made of the windfall, if you like, in terms of lower electricity bills that would result from the privatisation of Nuclear Electric? Come to that, if Nuclear Electric was not privatised, what would be the cost to each household?
Sadly, we can only speculate on the Labour party's windfall profits tax policy. The fact is that, if it has a tax-raising policy, windfall taxes seem to be part of it. Our purpose is to look at utilities as a source not of revenue for the taxpayer but of advantage in terms of reduced prices to the consumers. That is the difference between us and the Labour party.
We are now on target to complete electricity privatisation in the United Kingdom. The flotation of British Energy, one of Britain's three largest generating companies, marks the culmination of the Government's privatisation plans for the industry. This final burst of energy will extend the benefits I outlined a few moments ago. It will free the industry to make its own investment decisions. It will encourage improvements in the generators' overall economic efficiency, and enhance their competitiveness. Surely even the Labour party would not seek to deprive industry of the opportunity to serve us better.
Privatisation has helped millions to become shareholders. It has encouraged countless employees to take a stake in their future. It has given real power to the consumer by developing choice and competition. I hate to disappoint the Labour party by reporting that public interest in privatisation issues is undiminished. As of today, more than 1.3 million people, and rising, have registered for the public offer. I am confident that the Government are set for another successful sale. I trust that that puts the record straight about the benefits of privatisation and the level of public interest in our programme.
Now I should like to put the record straight about some of the other misconceptions which have been cast about. One of these—the right hon. Member for Derby, South spent some time on it this evening—is the level of proceeds we expect to receive from the sale. Of course, that is a matter for the market to decide, on the basis of the information in the prospectus. It is clear from some of the statements that Labour Members have made that they are not expert in that area. It may assist them in their understanding if I briefly explain some of the relevant factors.
When calculating the total proceeds from the sale of British Energy, it is important to take account of three components. First, there are the proceeds from selling the shares in the company. That amount will be decided by the market at the time of flotation. That will reflect the value of the assets in their current state, and the competitive market in which they operate. Prospective purchasers look into the future at profit and cash generation. They do not look into the past at the historic cost of the assets.
Secondly, there are the proceeds from the debt due from British Energy to the Government. That will be realised either by repayment or by selling the debt on to third parties. As a result of the restructuring of the industry, British Energy now owes £600 million to the Government that was not owed before the restructuring. Repayment or sale of that £600 million represents proceeds to Her Majesty's Government.
Yes, I can confirm that the total liability is following the asset. I shall come to that important point soon.
Let me emphasise the third of the three components that should be taken into account when calculating the proceeds from the sale of British Energy. The third one, and arguably the most important, is the liability that will now be met by the private sector, but would previously have been met by the taxpayer.
At 31 March this year, British Energy had accrued nuclear liabilities of £3.7 billion. These are calculated using a prudent discount rate of 3 per cent. real and the actual cash payments that they represent will be significantly higher, but spread out over a number of years. It is, however, important not to confuse discounted with undiscounted, as the right hon. Member for Derby, South appeared to do in her speech.
These liabilities have arisen from running the nuclear power stations, and they are predominantly associated with spent nuclear fuel that is awaiting reprocessing. Without privatisation, those liabilities would have been met by the taxpayer. Following privatisation, they will be met by the private sector British Energy.
The total proceeds for the taxpayer, therefore, include £3.7 billion for past liabilities passed to the private sector and £600 million for debt taken on by British Energy, in addition to the proceeds from the share flotation, of course.
That is a matter entirely for the company and its advisers. I suggest that the hon. Gentleman has a good look through the prospectus.
Let me develop a little more the question of liabilities. Liabilities are another area in which the Opposition—they demonstrated it again tonight—have difficulties appreciating the true position. I can only repeat yet again that liabilities have followed assets.
As long ago as last May, on publication of the nuclear review White Paper, we made it clear that we expected nuclear liabilities to follow their associated assets into the private sector. Again, when the Government gave evidence to the Trade and Industry Select Committee in November last year, we made it clear that it was a principle of privatisation that liabilities should follow their assets. In March 1996, when the nuclear industry was restructured, the principle was again followed: liabilities followed assets.
Let me say again categorically, for the record and for the avoidance of doubt, that British Energy is and will remain responsible for the liabilities associated with its stations.
The general public find it incredible that the prospectus requires British Energy simply to set aside £16 million a year. Somehow, over 100 years, at the 3 per cent. discounted rate, that is supposed to accumulate to £14 billion. I did my arithmetic this afternoon. Compound interest of 3 per cent. over 100 years requires twentyfold growth. Does anyone believe that, at the end of the next century, Britain will be 20 times richer in terms of gross domestic product? That is the crazy accounting system that the Government have used in arriving at the figure of £16 million.
The hon. Gentleman is confusing total liabilities with the decommissioning fund. There will be an initial capitalisation of some £230 million. There will also be an annual contribution of £16 million a year, which will increase in real terms, will be reviewed quinquennially and is calculated on the basis of the best possible actuarial advice, to provide a substantial and good margin for error above the actual anticipated needs. That position will continue in the longer term.
We have established an independent, segregated fund to cover all the longer-term post-closure costs of decommissioning British Energy's nuclear power stations and their sites, with the aim that all licensed nuclear sites will be cleared and returned to other uses. Obviously, it has been necessary to strike a balance between the need to reassure the public that British Energy will meet its liabilities and the need to recognise the company's commercial freedom. I believe that we have the balance right, and I would add that the scope of the fund has been agreed with the nuclear installations inspectorate.
The scope of the fund is not, however, set in stone. If, for example, British Energy changed its decommissioning strategy, the scope of the fund could also be altered to include new on-site activity not currently carried out on the site. I emphasise that any liabilities not covered by the fund remain the responsibility of British Energy. There is no question of any exemption. I say categorically that British Energy is, and will remain, responsible for the liabilities associated with its stations.
Does the President of the Board of Trade agree that, if any of the assumptions on the basis of which this contribution to the fund is made prove unfounded—it is generally agreed that £16 million is the lowest possible figure that one can calculate, assuming every optimistic scenario—the result will be either more expensive electricity or a reduction in dividend to the shareholders?
The hon. Gentleman may jump to conclusions of that kind. Those figures have been struck on the basis of the best possible advice and which will be reviewed quinquennially. Independent trustees are responsible for those matters, and it is the best estimate that those figures will be adequate. As I have said, nothing is set in stone, and they can be reviewed as required, but we are talking about a long-term accumulation of resources.
The final misconception on which I want to put the record straight arises from the stories of a dividend sweetener of £100 million being paid by the taxpayer from a special reserve fund. The first dividend that will be received by investors is an interim dividend in respect of the year ending 31 March 1997. That dividend will be paid by British Energy, using its own cash resources, and there is no question of payment by the taxpayer from a special reserve fund.
Opposition Members have also sought to create fears that the uncovered dividend will be paid for with money needed for long-term liabilities. Again, that is totally untrue. The company is satisfied on cash flow grounds that it will be able to meet all its liabilities. Were there ever to be a question of priorities, of course, liabilities would always come first.
I shall now discuss another benefit arising from this privatisation.
No; I want to make a little more progress in this short debate.
Opposition Members may have read that the Director General of Electricity Supply announced last week that he expects to be able to announce a reduction in the fossil fuel levy following privatisation from 10 per cent. to 3.7 per cent. That reduction will have been made possible by the nuclear privatisation, because premium payments to Magnox Electric are expected to end at the time of privatisation, except as necessary to recover moneys that were originally due to Magnox but unpaid before privatisation.
The reduction in the levy rate should lead to a reduction in bills of more than 6 per cent. in a full year, or about £15 to £20 in a typical domestic consumer's bill. I look forward to hearing Opposition Members welcome that during the debate.
I want to press on and talk about the reorganisation of the nuclear industry to form British Energy and Magnox Electric, which I believe will bring wider benefits than those associated with privatisation.
Magnox Electric, which will be staying in the public sector, has been established as a robust independent player in the electricity market. It will be a substantial baseload generator, with about 7 per cent. of electricity output in Great Britain. The objectives we have set require Magnox Electric to operate in a commercial manner, judging any investments by commercial rates of return. We intend that Magnox should be a full competitor in the electricity market, and that this increased competition will be of clear benefit to consumers.
Moreover, focusing management time and expertise on one type of reactor—Magnox—will bring significant benefits in improved efficiency. The Opposition talk only about the downsides of assets and liabilities being left in the public sector, but the Magnox liabilities have always been in the public sector, and that will not change. What has changed as a result of restructuring, however, is that there is now a much clearer focus on Magnox issues, with a renewed enthusiasm at every level of the company.
Magnox Electric is a first-class generator with a proven track record in station decommissioning, and I have every expectation that the creation of an independent Magnox company and its eventual integration with British Nuclear Fuels plc will enable them to build on and further develop that expertise, and will bring significant reductions in costs from greater efficiency in the management of liabilities.
Magnox Electric is a robust public sector entity, which will enhance competition in the electricity market and aims to secure the best possible value for the taxpayer.
The Minister said that Magnox had a proven track record on station decommissioning. I am astonished by his comment, in view of Trawsfynydd nuclear power station, which closed only a few years ago and will be there for 100 years. Where is this proven track record on station decommissioning?
The fact that it takes a long time to decommission a station does not undermine the capacity, skill and efficiency with which decommissioning is undertaken by the company. It has already made enormous progress with Berkeley, at costs substantially less than had been anticipated and provided for.
Since the possibility of a Hunterston C appears to be precluded by privatisation, it is very important for employment in my constituency to know whether there would be any inhibition to Magnox Electric building on the Hunterston A site, which it will inherit, perhaps for non-nuclear generation. Would be there be any such inhibition?
That is not a matter on which I have any decision or any position to announce tonight, when we are debating the privatisation of British Energy. That is a matter for the future. Magnox will remain in the public sector.
Last week, Labour launched another of its great attacks on the Government, which was going to be the greatest assault on this privatisation exercise, called its triple whammy—and it was wrong on every point. First, Labour alleged that the Government would not ensure that Magnox had sufficient assets to cover its nuclear liabilities. That simply is not the case. Secondly, Labour said that the cost of reprocessing British Energy's spent fuel would be left with the Government. It will not. That will be met by British Energy as part of its normal commercial operations.
Thirdly, Labour said that the United Kingdom's insurance arrangements are not in accordance with international conventions on civil nuclear liability. In fact, the United Kingdom's own insurance requirement is many times higher than the minimum required under the Brussels convention, and among the highest of all the signatories to that convention. Each and all of those accusations were wrong: not only wrong but fundamentally ignorant of the basic principles of privatisation—not a triple whammy, but a triple boomerang.
Far from nuclear privatisation being a disaster, as the Opposition would try to have people believe, excellent progress is being made. All the major milestones have been reached successfully and to timetable. The next stage will be the issue of the retail prospectus next week, on 26 June.
I remain confident that the final burst of energy will be as successful as the earlier sales, for the industry, the taxpayer and the consumer. I urge the House to reject the motion and to support the Government's amendment.
I welcome the debate. We are in the middle of the nuclear flotation. We have discussed the nuclear industry three times in the past two years—at the time of the nuclear review, on the announcement of the Government's intention to privatise and, recently, following the publication of the Trade and Industry Select Committee report.
Many right hon. and hon. Members were, and are, opposed to the principle of privatisation. My all-party colleagues on the Select Committee expressed their greatest concerns about the taxpayer's interests and were worried that there would be a quick, cut-price sale. Their anxieties centred on the main issues of the valuation of the assets, the definition of the liabilities and the liabilities' subsequent valuation. A distinction must be drawn between what constitutes a liability and what that liability is valued at.
My right hon. Friend the Member for Derby, South (Mrs. Beckett) has already described the doubts that surround the valuation. It seems strange that power stations costing more than £3 billion to construct should be sold for between £1.6 billion and £2.6 billion. At the time of the initial valuation discussions, parallels were drawn with the car leaving the showroom and the change in its value at that time. Of course we all recognise that the price will fall; but when VAT, excise duty and delivery charges do not have to be taken into account, the price will fall very quickly.
Since the last debate on this subject, and since the announcement of the flotation, a report has been published on the annual segregated fund changes by Professor Sadnicki. The paper was prepared for a local authority pressure group that is opposed to nuclear power. There has never been any secret about the author's concerns about the economics of nuclear power. Nevertheless, he and Dr. Gordon McKerran of Sussex university have been influential in constructing models on which the pricing of nuclear energy has been estimated. It is no secret, either, that their work in large measure informed the Government's nuclear review, in terms of the pricing of units of nuclear energy. It could also be argued that their work was influential in persuading the Government not to proceed with the construction of any more nuclear power stations. It certainly influenced British Energy's intentions not to proceed with any nuclear power station construction in the foreseeable future.
The report cannot be lightly dismissed. I do not agree with everything in it; some of its assumptions are over the top and are not necessarily designed to impress accountants—ultimately it is their view that must be taken into account.
Perhaps the Minister will deal this evening with the point that contributions to the initial transfer of the assets may constitute a subsidy under European law. Would they contravene European legislation? It would indeed be embarrassing for the Government if the money that they used as a sweetener for privatisation were found to be contrary to European policy.
The author of the report takes as his outside limit for such contributions a sum of £208 million a year, which compares with the £16 million that the Government have been talking about. I do not think that a realistic figure. I think that £127 million is rather closer; it is achieved by assuming average economic growth of about 2 per cent. until 2026. I am not altogether confident that the Labour Government who will take office next year will stay in power that long, but the lamentable economic growth record of the past 17 years will not necessarily prove to be the model for what will follow.
Why do not the Government mention long-term items such as post-operation waste charges and post-operation payments for BNFL decommissioning? The report's author doubts whether British Energy's commercial freedom can be squared with reassurances that, where liabilities arise, they will be met. If liabilities fall where the assets are, that may restrict British Energy's ability to perform according to the market's wishes. It is pointed out in the report that any surpluses from the constituent elements of BE will be given not to the taxpayer but to Magnox for its liabilities. No one will have been convinced by the superficial gloss that the Secretary of State put on the question of the Magnox liabilities.
The report also raises the issue of post-operational reprocessing and stage 1 decommissioning of the advanced gas-cooled reactors. There is also the problem of the ability of Sizewell B to make contributions after 2025. The lifespan of Sizewell B cannot be guaranteed, so it would be imprudent to make early financial forecasts on such an optimistic view of its time in service. The point is underlined by questioning of the estimates for decommissioning and waste disposal.
We have been repeatedly told by Ministers that liabilities will follow assets, but the figures in the report suggest that the accounting procedures will not be sufficiently transparent. Throughout its history, the nuclear industry has been shrouded in secrecy. To some extent, that was inevitable because the industry's purpose in the early days was the production of nuclear weapons, but when the veil has been lifted, there have always been expressions of false optimism—about the value of certain technologies, the cost of certain projects and the predicted cheapness of units of electricity.
Those shortcomings have been seized on by the industry's detractors, and when combined with the—often wholly unsupported—assertions about safety, the technology has been dismissed out of hand.
I believe that the case for nuclear power can and should be made. However, I have never made any secret of my opposition to privatising nuclear power. I am realistic enough to know, though, that once it has been sold off, it will not, barring a catastrophe, be brought back to the public sector. I hope that the debate will give due warning to those considering investing in the industry that the sums do not add up. Later on, taxpayers will not take kindly to being asked to cough up more so as to subsidise the segregated fund.
If the Government cannot meet their responsibilities, the sooner we get a Government who are prepared to do that, the better. The plain fact is that we do not know with any certainty what the costs will be. The Government have consistently chosen the rosiest scenarios, and the figures on which they have based their expectations have almost always been those that are most trouble free. I am not a Jeremiah when it comes to the nuclear industry—I happen to think that it has performed well in some ways—but I am not prepared to watch the industry being handed over to the private sector with no proper consideration being given to the costs of decommissioning or even to the form of that decommissioning. Neither am I convinced that the quinquennial review will be sensitive enough to deal with the problems as they arise.
Within two or three years, and before the five-year cycle is up, there could be serious financial difficulties which taxpayers, not shareholders, will be called upon to deal with. The industry is of great strategic importance. Consequently, it should not be thrown away, and its problems and disadvantages should not be treated as lightly as the Government have approached them this evening.
I suppose that these days I should begin by declaring a transient interest, in that my wife and I were taken to the ballet about a year ago by Dr. Robert Hawley and his wife. He, of course, is the former chief executive of Nuclear Electric and the current chief executive of British Energy. I hasten to add that we did not discuss the nuclear industry or its privatisation. I mention that—apart from feeling that I ought to—because I know Bob Hawley well. In fact, I worked with him when he led Northern Engineering Industries, the north-east engineering conglomerate.
I am in a position to make a judgment—which is that this man has a tremendous ability in engineering, as well as great experience in private industry. I believe that he will give great leadership to the industry in the private sector. That is important because the House and the public are right to be concerned about the quality of leadership, particularly in an industry that is obviously sensitive.
I strongly support the movement of the nuclear industry into the private sector. I have become a great believer in privatisation, based on my judgment of the experience of privatised industries over the past 15 years. I did not come to the subject in any dogmatic sense and, unlike many of my hon. Friends, I did not start with a strong presumption that only the private sector could deliver the quality and efficiency that we now see in the industries that have been transferred from the state. I have applied my judgment and watched as the industries have been transferred. We have seen a watershed in the development of industry in this country. In industry after industry, successes and efficiencies have sprung from competition.
My right hon. Friend the President of the Board of Trade referred to just one statistic week, but it tells a story. Before privatisation, the industries were costing the taxpayer £50 million a week; the taxpayer is now gaining, in terms of tax paid, approximately £55 million a week. That is only one aspect of it. The benefits that have flowed to consumers are tremendous and the opportunities that the industries have been able to develop are significant.
Three areas in the nuclear industry will gain. First, the consumer will gain because the electricity industry will have additional competition, which will produce greater efficiency. We have already heard that the average electricity bill is likely to be reduced by some £20 as a result of the fall in the fossil fuel levy, which has been made possible as a result of the privatisation that is now going into effect. That benefit will be felt by every consumer of electricity.
Secondly, taxpayers will benefit directly from the proceeds of the sale. They will also benefit as a result of the transfer of liabilities. I have done a quick calculation in my head—approximately £4.4 billion-worth of liabilities will be transferred from the taxpayer to the private sector. That is a significant benefit to the taxpayer.
Thirdly, the industry will benefit in a number of ways: it will be able to make its own commercial judgments, to run its affairs free from political interference, to decide on its investment programme and its capital plans, and—perhaps most significant of all—be free to operate competitively in the international market.
That is a significant market, and a market in which British experience excels. More than 30 countries have nuclear plants in operation or are building plants that are yet to be commissioned. The expertise that the British nuclear industry has to offer is tremendous. Significant markets can be grasped and, if the industry is free to do so, it will benefit significantly. Privatisation will enable that to happen.
Understandably, there is bound to be some public concern about this privatisation. There is always public concern about change. The public have always been sceptical, if not hostile, about privatisation—but they have slowly changed their views as they have seen the successes and benefits that it has brought. This is a particularly sensitive industry and it is understandable that people should be concerned and need to be assured about the safety aspects. It is regrettable that the Labour party has, at times, sought to exploit that fear, which it knows is groundless. The subject has been examined in great detail by a number of bodies involved.
Does the hon. Gentleman recognise that there is no such thing as total safety? Therefore, we can predict that, some time in the future, there will be safety problems. Is he confident that the insurance arrangements, and the premiums that have to be paid, are sufficient? Chernobyl is often referred to, but it was a different type of power station. I refer also to Three Mile Island in America and to the PWR, which was a forerunner to Sizewell. That is an important element. There is a lack of public confidence in the industry and the only way that it can be restored is by ensuring that there is proper provision to protect the public when an accident happens.
The hon. Gentleman is right: there have been problems relating to safety in the nuclear industry. However, I remind him that it is not the only industry to be affected in that way. We cannot guarantee total safety in any industry or in any walk of life. However, it is particularly important in this industry that the safety measures, and the policing of them, are taken to the highest level possible. I believe that they have been, and I shall return to that point in a moment.
The hon. Gentleman referred specifically to insurance. He is absolutely right: it is important that the industry is properly and fully insured. He asked me whether I believe that it is adequately insured. Yes, I believe that the arrangements that exist for the industry, and the international arrangements that underpin it, are satisfactory and sufficient to ensure proper protection in the unlikely event of something going seriously wrong.
There are nuclear power stations in this and many other countries. It is true that they pose a potential risk. However, if the hon. Gentleman imagines that there is a link between the extent of safety protection involved and the nature of the ownership, I hope that I can convince him that that is not the case. The Trade and Industry Select Committee looked at this issue thoroughly, and it concluded that there was no reason why there should be any greater safety risk under privatised ownership than there had been under state ownership.
The Health and Safety Executive has examined the problem, and it has said that there is no evidence to suggest that there would be any greater risk under privatisation.. The industry has also been examined by the World Association of Nuclear Operators, which has said that there is no evidence to suggest that a privately owned industry carries with it any greater safety risk.
I believe that the reverse is true. The hon. Member for Wansbeck (Mr. Thompson) mentioned the horrific accident at Chernobyl. I remind him that the Russian nuclear industry was not in private hands. Indeed, one could say that the Russian nuclear industry was operating in a society that had taken state control to its ultimate conclusion. The significance of that is that there is a tendency in a command economy for the individuals within the structure not to feel a personal responsibility. Therefore, corners are cut, the buck is passed and the system—in this case, the vital safety system—collapses. That is precisely what happened at Chernobyl.
I am aware of those factors, but the worst nuclear accident occurred at Chernobyl. I do not intend to divert attention from accidents that have occurred in the private sector, and the hon. Gentleman points correctly to one of them. I do not suggest that privatisation automatically means that there is no risk at all: I am merely rebutting the claims made by some members of the public—egged on by Labour Members—that privatisation in itself brings a greater risk. That is palpably not true.
Does my hon. Friend agree that there is a great danger of unfounded scaremongering on that point? The allegations made by the hon. Member for Wolverhampton, North-East (Mr. Purchase) about the Three Mile Island incident are not properly founded in fact, and that point has been well established.
My hon. Friend is correct. I wish to quote the comments of two organisations on the safely issue as I believe that it is important to lay to rest the myths that have been propagated in that area. The leading economic consultants, NERA, recently published a report on the impact on safety of privatisation in a number of industries, including the nuclear industry. It concluded:
Occupational safety standards have improved in nearly all of the privatised firms and industries. In some cases the extent of improvement
in safety standards
has been significantly greater than elsewhere in the economy … the incidence of such injuries
to members of the general public
is very low on average across the privatised firms and industries … the performance of privatised companies has improved strongly since privatisation".
My second quotation comes from British Energy. I think that it is important to take account of its view, as it will ultimately be responsible for the industry. Peter Haslam, the director of public affairs, wrote to me in March. He said:
Whilst the regulatory regime in relation to safety will remain fundamentally unchanged, some people may see the relationship between the NII and the Company as more transparent than whilst both were in the public sector. Safety is paramount and both Nuclear Electric and Scottish Nuclear have a Director with responsibility for safety who reports directly to their respective Chairmen. Each event of any nuclear safety significance is investigated with the utmost rigour and importance is placed upon creating a culture of openness. Moreover, the companies achieved a very real improvement in their safety records from the time of Vesting hand-in-hand with a much improved commercial performance. Profit and safety are not antithetical".
I stress that it is clear that the nuclear industry will maintain safety as paramount. None of the structures that have been set up will be diminished—indeed, they will be enhanced. The independent role of the nuclear installations inspectorate and other agencies responsible for safety will be retained. Those independent bodies will ensure that standards are maintained.
Significantly, the people within the industry will ultimately ensure that high standards are achieved. Within British Energy, we have highly qualified, highly motivated engineers, nuclear scientists and managers who have an absolute interest in safety. They will not compromise their standards, quality or integrity in any way. I have complete faith in them. If their integrity is questioned, they know that they ultimately carry personal responsibility within a privatised set-up—far more than in the state sector. If anything goes wrong, there will be no hesitation in pointing the finger at them as individuals. Therefore, they will not take any risks.
If that assurance is not sufficient, we know that they are driven by a commercial motive. They know that, at the end of the day, far from putting profit before safety, the maintenance of the profitability of their company is absolutely dependent on their ensuring that safety is paramount. If anything were to go wrong, the enormous costs incurred would wipe out the company's profit for years to come.
For all those reasons, I believe that a myth has been propagated about safety in a privatised nuclear industry. I believe that the industry will be safer in privatised hands, and that any concerns are misplaced. Above all, I believe that privatisation of the industry will bring enormous benefits to the country, to its people—to the consumer and the taxpayer—and to a great, innovative British industry. For those reasons, I congratulate my right hon. Friend on the verve with which he has pursued the privatisation, and I am delighted that it is virtually in place.
I shall keep my remarks fairly short. I have spoken about this matter twice before in the House and I do not intend to restate the issues. Even at this late stage in the Government's plans, I stress that the privatisation is wrong and will prove hugely costly to the British taxpayer. It also carries some risks that I do not believe the people of this country will accept. Therefore, I urge the Government to think again.
The privatisation and the sweeteners that have been offered to the private sector have incurred criticism from the Select Committee on Trade and Industry. The European Commission has launched an investigation into illegal state aid and we have watched the barely concealed warring between British Energy and the Government over the scale of the liabilities that should follow assets into the private sector.
In spite of the Minister's remarks, it now appears that the war has been well and truly won by private sector interests. We have yet to count the costs that the public will pay through job losses and a tax bill that is likely to run into billions of pounds. There have been repeated ministerial pledges that the taxpayer will not lose out, but the recently published prospectus does not back them up. Amid confusion about the detailed figures, one thing is striking: the taxpayer will be significantly worse off after privatisation.
As the motion points out, proceeds from the sale of the nuclear power stations that are up for grabs are likely to be less than the cost of building Sizewell B alone. In a previous debate on the subject, I described the nuclear industry as a white elephant. Although I was taken to task on that occasion by the hon. Member for Ayr (Mr. Gallie), I stand by my words. How can something that is eventually sold for less than it took to build, and which will be a cost to the taxpayer well into the next millennium, be described as anything but a white elephant?
The money that must be paid out will go towards decommissioning the white elephant. Pledges that the private sector would shoulder the cost of cleaning up the power stations after privatisation have been quietly and comprehensively ditched. Long-term bills for the seven advanced gas-cooled reactors and the Sizewell B pressurised water reactor—amounting to an estimated £6.9 billion—will fall on the taxpayer. Even taking into account the likely proceeds from the sale, that leaves the public sector at least £1.2 billion poorer after privatisation. Why must the taxpayer cover that huge cost? The answer is simple: the privatisation would be impossible if the private sector took on all liabilities as well as the so-called assets of the nuclear industry.
The hon. Gentleman is talking about the costs of an industry or a product. If he were selling his car, its cost would be quite irrelevant. The price that he gets for it is the price in the market. The price at which people who have applied for shares in this privatisation is the price that they are prepared to pay. He must understand that the price has nothing whatever to do with the cost of the industry.
When we sell a car, that should be the last we see of it. The peculiarity of the nuclear industry is that, once the individual who has bought the car has finished with it, the car is returned and we face an even larger cost for scrapping it safely.
We now know that British Energy is to be exempted from at least some of the costs of reprocessing spent fuel—worth £17 billion. We now know that British Energy is paying only £16 million a year into the fund to pay for the cost of the clean-up operation—which is estimated to be a £3.6 billion saving in comparison with a more realistic and appropriate amount. We now know that the long-term fund assumes investment rates that are likely to leave the taxpayer with a lump sum bill of at least £1.6 billion. Whichever way privatisation is viewed, it is difficult to escape the reality that, yet again, the taxpayer is expected by the Government to subsidise shareholders' profits.
As I have said in the House before, the British public have already paid towards decommissioning through the fossil fuel levy on electricity bills, which has raised £1.8 billion. That public money was diverted to building Sizewell B. Given that the taxpayer is being asked to fork out again for decommissioning, will the Government return that money to the British public? Clearly, the answer is no.
Let us not forget that the privatised power stations are not the only nuclear power stations that will, at some point, need to be decommissioned. What of the Magnox stations—the dirtiest nuclear power stations in the world? They are too much of a liability for even the Government to attempt to privatise them. Who is to pay for that decommissioning? The answer, once again, is the taxpayer. Any profits from the advanced gas-cooled reactors should be going into a decommissioning fund that will cover the eventual cost of all the power stations, but instead it will go into the pockets of British Energy shareholders.
I simply do not believe that there is any way in which private sector efficiencies can cover the liabilities, or the loss of the income stream that the Government would have had for meeting those liabilities—an income stream that we know was inadequate because the Government accept that it is unlikely that the privatised industry will be building any further nuclear power stations. In other words, it is not worth their while. Profits will simply not cover the real costs of the industry.
At the very least, do the Government agree that proceeds from the privatisation should be specifically designated to help meet Magnox public sector liabilities? The proceeds would probably not cover the cost of decommissioning the Magnox stations, but they would certainly go some way towards doing so. The proceeds should be placed in a segregated fund, and perhaps, the Government could add to them the £228 million gifted by the taxpayer to British Energy in the form of an endowment—a gift that remains totally without justification.
As we have already heard in this debate, this privatisation raises serious questions about safety in the nuclear industry. I do not agree with the hon. Member for Beckenham (Mr. Merchant) that safety issues should be underrated, although I am glad that he accepts that the nuclear industry carries safety risks. Not all Conservative Members would even accept that. I credit him with being honest. After that, we can disagree or not about whether those risks are worth bearing.
When I spoke in a previous debate on the nuclear industry, I was accused by a Labour Member of scaremongering about safety. I do not think that it is scaremongering to remind the Government of the submission made to the Select Committee on Trade and Industry by Captain Killick, the former director of safety and quality at Scottish Nuclear. He sought to remind the Government that a privatised nuclear industry is likely to
seek to make small erosions into safety margins for commercial gain.
I do not think that that personally criticises individuals. It is simply in the nature of the profit-centred job that they will be carrying out. The hon. Member for Beckenham was over-optimistic on that front. If a former director of safety and quality in the nuclear industry is concerned at the safety implications of privatisation, surely it is not scaremongering to take those concerns seriously.
Leaked internal documents from the Clifford Chance law firm show that the Government have been warned that cuts in manpower are compromising safety. Do the Government accept that advice, or do they dismiss it, too, as scaremongering? We have learnt that vital safety information was omitted from the privatisation prospectus. We have learnt that nuclear inspectors are increasingly concerned about the loss of skills in the industry and the ability to cope with an emergency. Do the Government consider them to be scaremongering too? As more and more details about privatisation are brought into the public domain, this privatisation makes less and less sense.
Standing in the Chamber today, it is difficult not to feel a sense of deja vu. We are debating for the third time what everyone knows, but which the Government in their quest for privatisation and short-term Government revenue at any cost still refuse to admit: the proposed sale of the nuclear industry is an expensive error of judgment that will cost the taxpayer dear. The Government's approach to the privatisation can be described only as deceitful and inept. We have received assurance after assurance from Ministers that liabilities will follow assets into the private sector. Those assurances have been steadily watered down over recent months, as the extent to which Parliament has been misled has been slowly uncovered.
The Liberal Democrats have not opposed every privatisation that the Government have proposed. We have sought to address them one by one.
I think that what the Government have said is misleading. For example, in the previous debate on this subject, I said that the Government had gifted £265 million of taxpayers' money to the privatised nuclear industry. Ministers and others argued that it was not taxpayers' money, but the truth is that that money would otherwise rest with the taxpayer. On a number of other issues, the way in which this privatisation has been addressed is misleading. I do not think that that is unparliamentary or inaccurate.
As I said, the Liberal Democrats have not opposed all privatisations. We have been open to some, and criticised others because of concerns about the way in which industry will respond to those who use the privatised industries, especially utilities such as water. I think that we have been proved right on that.
On nuclear privatisation, the error goes more to the heart of the way in which the Government approach such issues. The Liberal Democrats believe that this privatisation is wholly financially mistaken. Since the Government are not stupid, the privatisation must be about getting short-term returns before the general election and the need for short-term tax cuts. In the long run, the proposed privatisation will be a financial disaster for the British public, and the House should put a stop to it.
I should like to follow the remarks of the hon. Member for Truro (Mr. Taylor), but I think that the point I made in my intervention was right. The value of something is its marketplace value, and that is what we should be considering, but we have been around that course. Decommissioning costs, as the hon. Gentleman knows very well, since he has been talking about them, have been dealt with very effectively through the segregated fund. I know that some of my hon. Friends have been very patient and want to speak, so I shall be brief.
Privatisation of the nuclear industry is one more step down the path of the innumerable privatisations that we have successfully launched and seen through during the past 16 years. The hon. Member for Truro said that it is all about money. Governments need money, and taxpayers resent being robbed of too much money, but a much more important reason for privatisation—I say this seriously to the hon. Gentleman—is freeing industry from the dead hand of government. I include our Government in that. I may be able to take the hon. Gentleman with me at least some of the way, because he has just said that his party has not opposed all the privatisations. My recollection is that the Liberal Democrats have not been very enthusiastic about them, but I shall not go down that path.
The real point is that Governments of all complexions have been bad owners of businesses. Business is the real bottom line. Our post-war history shows that to be true. Governments have been bad owners because they have not looked at businesses in a commercial or industrial way. Too often we—I include the Labour party, and I am sure that the Conservative party has done this in the past as well—have been tempted by short-term political advantage to freeze prices in the Post Office or, when the Post Office ran telecommunications, to say that it should not put up prices because a general election was coming up, or to tell British Airways, when it was owned by the Government, that although it had plenty of passengers it could not buy any more aircraft because the Government thought that the electorate would be more impressed if they spent money on schools or hospitals.
The argument has only to be put in that way to show how absurd is the ownership of industry by government. We are bad owners. We look at things in the wrong way. We are politicians. Let us be frank: we are concerned with garnering the votes when a general election or a by-election comes along. We would not be here otherwise. Those are the things that guide us; we should not have industries near us with which we can play around.
I remember Sir Ian MacGregor saying, when he was looking after British Coal—he also successfully guided British Steel to privatisation—that when he made decisions they reverberated all the way down the organisation, and the Secretary of State would be on the telephone asking why he was doing what he proposed, was he sure it was the right thing to do and might it not be better to think again because there was to be a question in the House, or the Select Committee wanted everyone up in front of it. Businesses cannot be run in that way.
My first point is that freeing this industry is just one more step down the path of getting industry out of the hands of government—out of state control, freeing it to make its own decisions, get its own investment and recruit its own people. Some of my hon. Friends will remember when some nationalised industries could not recruit, for example, the best finance director for their businesses because they were not allowed by statute to pay them more than a certain sum of money. The Minister was nervous of saying that a finance director should be paid X in case people said that that was a lot of money and he was blamed. Putting it that way shows the absurdity of it all, but that was the world in which we lived before. Changing that world is what privatisation has been about.
If there is change, and people are allowed to run businesses properly and efficiently according to private sector rules and away from politics, in the end—as we have seen with the other privatisations—consumers will benefit. I believe that exactly the same will happen with the nuclear industry. There will be price cuts for the benefit of consumers.
We in the House of Commons should be proud that, in the earlier privatisation of the rest of the electricity industry, we were one of the first countries, including the United States of America, to try—to a large extent we have been successful—to create a competitive market for electricity. That was done not for the Conservative party, not for doctrinaire reasons, not to bring in the money, but for the benefit of consumers. Consumers who gain from a competitive marketplace.
All sorts of clever people can write articles saying that the present electricity market, with a regulator, the pool and all the complications, is not perfect—I am sure that they can make some cogent arguments—but we should take some credit from the fact that we have started, and the market will be refined as the years go by. It is right that we should have privatised electricity generation and that we are now successfully introducing privatisation of the nuclear industry.
I grant the hon. Member for Truro that the establishment of the segregated fund is a fudge in a sense, because nuclear is special. His riposte to me was right, but I think that I, too, am right to say that the actual cost has no relationship to the market price. The hon. Gentleman is right to say that it is a fudge, but it is a balancing act between the contribution that the Government rightly feel that taxpayers should pay for decommissioning, and the contribution that the shareholders will pay for decommissioning. We can argue that the figures should be different, that there should be more for one and less for the other, but that again is a judgment that the Government have had to make. That judgment has to be right, or the privatisation will not be successful.
My problem is that the Government are sacrificing a known income stream. If someone is to take it over, they have to make a profit, so there must be a loss on that. The only way of making that up is by making efficiency gains in the industry, but nobody will be building new privatised nuclear stations—so how can there be a sufficient gain for the shareholders and how can the Government's return make up for the loss of the income stream? The figures do not add up and nothing the Government have published suggest that they do.
The hon. Gentleman will have to wait and see what the efficiency gains will be. We cannot prejudge the matter. It would be ridiculous for me to say that they will be X, Y or Z, and it would be equally ridiculous for him to say that they will not be X, Y or Z. We can, however, make a judgement on the basis of experience. There is no doubt in my mind that the Government underestimated the costs that could be taken out of the regional electricity companies. They were even more inefficient than we thought they were when we privatised them, and huge costs have been taken out of them. I do not know whether there will be such a big cost reduction in the nuclear industry. Let us say that it will not be so much, but I am sure that there will be a large cost reduction in getting away from the Government and running the industry efficiently.
We should also knock on the head the question of safety. Of course it is paramount. In a way, that is a ridiculous thing to say. That is true of any industry. There is nothing particularly special about the nuclear industry, except that a disaster such as occurred at Chernobyl is horrific. In an ordinary factory, a few people are hurt, which is terrible, but it is not a massive disaster that affects thousands of people. It is a question of scale, but the principle is the same.
Parliament has laid down, as hon. Members know, in the Health and Safety at Work etc. Act 1974, how industries should be run safely. The Health and Safety Executive has clearly said that it is happy with the arrangement. If it is not, it will tell the company, and the company will make changes. Once an industry is in the private sector, its directors have a clear responsibility for safety and, ultimately, they can end up in prison if they neglect their duties. It is a serious business for the people who run companies.
I am sure—I think that the House will agree—that the industry will take the same rigorous approach to safety whether it is in the public or the private sector. It could be argued that it might be even more rigorous in the private sector, because people's personal futures and the shareholders will be involved. I believe that it will be exactly the same. I compliment those who have worked for so long in the British nuclear industry on the very high standards that have been attained, and which I am sure will be maintained in the future—so we need not have any concerns about that. The structure is in place, through health and safety legislation, the Health and Safety Executive, the duties of the directors and the general responsibilities of the nuclear inspectorate. It is a tightly regulated industry, and quite rightly.
I am confident that this privatisation will follow the path of earlier privatisations, and be another success. I hope that it will be. Some hon. Members have always been against the nuclear industry. I do not want in any way to deride them, because we are all entitled to our view, but it is wrong to carry those views forward to an industry that is successful, has a good safety record, and now has the opportunity to proceed into the private sector. I hope that it will do very well.
Perhaps we should compare the nuclear industry with the mining industry, which has now been successfully privatised. Nobody suggests that, in private hands, coal mines are less safe than they were under public ownership. I do not think that anyone has made that claim. Perhaps they did during debates on privatisation of the coal industry, but I do not think that any hon. Member has said since privatisation that they are being run dangerously. The coal industry has applied stringent and strict safety measures, just as the nuclear industry will when it is in the private sector.
I compliment the Government on this privatisation, and believe that the House will see that it is one more successful privatisation, and one more toy taken out of the hands of government and placed where it should be—in the hands of professional managers.
The hon. Member for North-West Surrey (Sir M. Grylls) recognised the uniqueness of the nuclear industry but failed to develop that point. Had he done so, he would have recognised that that uniqueness marks it out as an industry that should remain in the public sector.
The United Kingdom's nuclear industry is unique in that it is made up of a mix of stations that are peculiarly British in design, with the exception of the pressurised water reactor. Although the industry lacks the uniformity that is found in some countries—for example, France—the stations are linked in most important ways, so it just does not make any economic sense to privatise the advanced gas-cooled reactors and PWRs and separate them from the Magnox stations.
Together, the AGRs and PWRs have massive liabilities. Magnox stations will be the first stations to be decommissioned, and as a PWR station costs some £3 billion and may have a life of some 30 years, it should be part of the public sector so that the income stream that it generates can go towards meeting the enormous liabilities that will have to be met. The House may be aware that the Sadnicki report, which was published on 5 June this year, showed that it is likely that the public sector will be left with liabilities of some £6.9 billion as a result of this privatisation.
I must question some of the points that the Minister made, because on this privatisation the Government have been consistently economical with the truth. They know full well that, if they put their cards on the table, they would not attract investors to the industry. Even though they have kept a veil over certain information, they have still had to use at least £100 million to attract investors.
In the nuclear review, the Government said that the full liability would follow the asset. This evening, I heard the President of the Board of Trade confirm that from the Dispatch Box, but there is still much scepticism. I share some of the fears voiced by the hon. Member for Truro (Mr. Taylor), who speaks for the Liberal Democrats. The House will be aware that the Select Committee on Trade and Industry reported after making a thorough study, yet it was, to some degree, sceptical about the breadth of the segregated fund.
The Select Committee made two recommendations in that regard: first, that the Government should establish more reliable arrangements to ensure that long-term liabilities arising after the closure of the stations are discharged; and secondly, that the Government should set out in detail in the prospectus for British Energy their conclusions about the appropriate level of contributions to the segregated fund, and that the level of provision for that fund should be prudent.
As far as I am aware, that detail has not appeared in the prospectus; because it has been light on information, people are sceptical of the Government's motives. Liabilities for both Magnox and the AGRs, with PWRs, are massive. In undiscounted terms, they are £31.6 billion. Those for the AGRs and PWRs are £14.6 billion. If the Government are correct in what they have been telling the House, the whole of that £14.6 billion will follow the asset.
When we examine the position a little more closely, however, we see that there are certain questions to be raised. The Sadnicki report, published on 5 June, claims that liabilities of £6.9 billion will be left in the public sector. The report begins by looking at the segregated fund. The fund provides for British Energy to contribute just £16 million annually, but the report suggests that that sum should be increased by 800 per cent., to £127 million a year, if the liabilities are to be met.
The report also discusses the discounting of liabilities that already rest with British Nuclear Fuels plc, which—in terms of fuel that has been reprocessed by BNFL—is estimated to be worth some £4 billion. Sadnicki's analysis suggests that the Government will reduce that to just £1.7 billion. The report also examines the way in which the Government are applying the interest rate. It considers the 2 per cent. that Government actuaries advise to be insufficient to ensure that the fund will accrue enough to meet all its liabilities.
Let me sum up the report's analysis. It suggests that the public sector will be left with liabilities of £6.9 billion, but that is not the end of the story: the £6.9 billion will be in addition to the £17 billion of liabilities already created by the Magnox stations. In other words, the public sector is likely to be left with a massive £23.9 billion of liabilities as a result of privatisation. It would seem to any sensible person that an industry that creates the liabilities created by the nuclear industry must provide the income stream that the newer stations are able to provide in order to meet such liabilities; in this instance, however, the income stream will go into the private sector, and those massive liabilities will fall on the taxpayer.
Much has been said about safety. I do not want to cover ground that has already been covered in our last debate, but I wish to draw attention to the latest report by the law firm Clifford Chance, which was asked to carry out a survey of the industry and report to the Government. In that report, which has been made available, Clifford Chance stresses that the reduction in skilled manpower in the nuclear industry could lead to error. The industry relies on highly skilled manpower, and in an industry such as this mistakes can be disastrous.
None of that information has been published in the prospectus, but Barclays de Zoete Wedd—the company that has been advising the Government—suggests that the industry will be able to make a profit only by increasing the performance of AGRs from its current 72 per cent. to 82.5 per cent., an enormous leap. The AGRs have so far achieved an operating performance of no more than 74 per cent., back in 1985, and 82.5 per cent. does not seem achievable. Those who are using the prospectus as a guide to investment should have had that information, so that they could make a judgment. The Government know full well however that, if the Clifford Chance report were made available to them, they would decide not to invest after one look at it, because there are so many risks.
The last time we debated the issue, I told the House about the informal network in the industry that passes information from station to station and from engineer to engineer. That is particularly important in relation to safety. When those who gave evidence to the Trade and Industry Select Committee were questioned, they said that there would continue to be no such thing as commercial confidentiality to cut across the network. Since then, I have had the opportunity to talk to senior people in the industry, who now believe that commercial confidentiality is likely to reign. That means that an important network, along which a good deal of information about safety is passed, is likely to be cut. Again, that will add to risk in the nuclear industry.
One of the other things to which the Minister has not referred and which was in the Clifford Chance report concerns liabilities in relation to common law damages. I note, for example, that The Guardian today refers to the report on the issue. The Guardian suggests that the 20,000 "radiation workers" who have been close to radiation—workers who are currently in the industry and who have worked in it—face a high cancer risk, and that, by the end of the century, each year, 200 people who have worked in that nuclear industry sector are likely to develop cancer.
At present, the industry has a no-faults common law system, but if settlements amount to £20,000 on average, 200 people a year means £4 million of common law liabilities. None of that information, however, appeared in the prospectus. Why was that information not in the prospectus?
The nuclear industry is unique and it needs to be linked together because of the enormous liabilities. When one part of it is privatised, especially the part that comprises newer stations that create an income stream, that income stream is no longer available to deal with the liabilities; consequently, the taxpayer must meet those liabilities.
As I have said, those liabilities are enormous. The segregated fund is not sufficient to be able to cater for them, so clearly the taxpayer will be that much worse off from privatisation. The asset's cash value is extremely low and privatisation would not be possible if sweeteners were not available to investors. If privatisation were abandoned, as it should be, the AGRs and PWRs would be kept in the public sector and the revenue stream that they would generate would go towards dealing with the liabilities. In that sense, it would relieve future taxpayers of having to meet the industry's enormous cost.
Nevertheless, I am going to continue.
The nuclear industry has been a source of enormous pride to the country. I am delighted by the idea that, at long last, we are going to privatise it, which is marvellous news for customers, for taxpayers and, ultimately, for the nuclear industry.
I first became interested in the industry in the 1960s, a long time ago, when my father was known as Patrick Maitland and was the prospective Member of Parliament for Caithness and Sutherland. I remember going around Dounreay, which was up and running and a thriving show for the future: there was no doubt about it. Ultimately, we will run out of fossil fuels and everyone, everywhere will have to rely on the nuclear industry. I had an opportunity to learn at first hand how it would become part of our everyday lives and how not only we but our children would depend on it. Dounreay meant a great deal for the whole country and brought a tremendous amount of vibrancy to the local economy in terms of jobs and infrastructure.
Moving on from those early days, it is exciting to think what privatisation will do for the industry and the country. Nuclear energy will undoubtedly gain much greater commercial freedom. It is appropriate for the Government to hand over all management decisions to the professionals, who know the business and should control investment—so that they no longer have to be influenced by public spending levels or other considerations. The industry should have the freedom to compete for and win business in overseas markets, like any other venture.
The right to manage the industry professionally matters, but so do the industry's customers. We will all benefit from lower electricity bills. Surely there cannot be anything wrong with that prospect. It is absolutely right to support greater competition in the electricity generation market, which will come from greater efficiency, responding to consumer need and lower prices. A typical household electricity bill is set to fall by £20 as a result of nuclear privatisation and will tumble further as time passes. The taxpayer will also benefit. The proceeds of privatisation will go into the public purse, which must be good news, and the company's liabilities will be transferred from the public to the private sector—which will then take responsibility and run the risks.
I acknowledge that safety is paramount, but I intensely dislike Labour's exploitation of that aspect for political purposes, to frighten people when there are no grounds for doing so. Scaremongering about the nuclear industry has been going on a long time and is unacceptable. In the 1980s, the Campaign for Nuclear Disarmament concerned itself with defence issues; but as soon as it started losing that argument, CND turned its attention to the nuclear industry for political purposes and tried to terrorise the public into feeling uncertain and uncomfortable. If such propagandists think that they are winning, they are wrong. The Government have consistently put a high price on safety. There is no reason, just because the industry is to be privatised, for anyone to believe that safety will be jeopardised.
The existing regulatory mechanisms will remain in place. The nuclear installations inspectorate will continue to enforce safety. Other bodies that have offered an opinion are in no doubt that safety will be properly regulated and rigorously applied. The Select Committee on Trade and Industry, after extensive investigation, concluded that the privatisation of British Energy need not result in any reduction in safety.
The World Association of Nuclear Operators said that it is
aware of no evidence to suggest that the ownership (i. e. public or private) has any bearing on the level of safety and reliability achieved".
As my hon. Friend the Member for Beckenham (Mr. Merchant) pointed out in his speech, the Health and Safety Executive has made clear its support; it has no doubts about the matter.
In the light of all that evidence and that strong support, I am sorry that the right hon. Member for Derby, South (Mrs. Beckett) should, on a quite unfounded basis, turn up the fear factor.
The right hon. Lady issued a press release on 17 November last year, which stated:
people have all along feared that safety would take second place to the Conservatives' need to raise money for tax cuts".
If that is not blatant scaremongering for political purposes—without any foundation whatsoever—I do not know what is. That quotation tells me and everyone else one thing: Labour is certainly not fit to govern.
I am delighted with this debate. I am delighted that we have had the opportunity to welcome the privatisation of a very important part of British industry. I have absolutely no doubt that everyone will benefit, that the electorate will feel comfortable about the way in which we are transferring the industry into the private sector and that they will give it their total support.
It comes ill from the hon. Member for Sutton and Cheam (Lady Olga Maitland) and from Conservative Members generally to complain that Opposition Members have in some way for political purposes raised the spectre of a nuclear incident. It comes very ill from them because the purpose of this privatisation is completely political—to get a few more quid in the jam jar so that the Government can give it away in tax cuts to sweeten the electorate before the next general election. If anyone is playing politics with the nuclear industry, the blame rests fairly and squarely on Conservative Members. There should be no doubt about that in people's minds.
It is interesting that at least two Conservative Members who have spoken in thisdebate—especially the hon. Member for Beckenham (Mr. Merchant)—made the point that, in general, safety records of former Government-owned utilities have improved since privatisation. A report which came out only a few days ago stated that safety records had improved.
In the years between privatisation and now, would it not be amazing if gains had not been made in industry and plant safety and operation? It would have been even more amazing if, in 1945, we had nationalised the coal industry, for example, on the basis that we wanted to improve safety. It would have been even more amazing had real gains in safety not been made.
As technology moves on, men and women work more safely, and processes, efficiency and effectiveness are improved. Those are normal developments in a dynamic technology, and they have occurred in this and in many other industries. It would therefore be quite extraordinary if the claim that safety records have improved could not be substantiated.
The point is that the nuclear industry's safety record should be second to none—a point that Opposition Members have repeatedly proclaimed. The point is that privatisation—or commercialisation—brings to bear unnecessary pressure on workers to cut corners, to increase productivity to meet specific financial targets. That is particularly relevant to safety in the nuclear industry, because, so far as possible, nuclear reactors must continue working without interruption if they are to operate most economically.
Very often—three times recently—we have heard about incidents in which a reactor should have been closed down but was closed down too late or not at all. Fines have been levied for those incidents. We are introducing an unnecessary commercial imperative into the industry. The British nuclear industry has one of the best safety records. It is continuing to make considerable productivity gains and, for as long as the installations remain in commission, it will continue to produce electricity at a lower and lower cost.
I am following the hon. Gentleman's argument carefully. He said that the pressures on a privatised nuclear industry would make it less safe. If he could point to any of the industries that we have privatised in all these years in which that has happened, his argument might have some strength. I cannot recall any that have become less safe because of commercial pressures in the private sector.
It is true. The level is much higher than it was under the National Coal Board.
The issue of ownership is now in the political frame for both sides of the House and there is merit in arguing that it is outcome, not process, that is important. The nuclear industry is special, because the inherent dangers of an accident are tumultuous compared to those from any other form of energy generation. Because of that, it is important that it should remain the responsibility of the Government of the day. The Government should not be attempting to get out from under that responsibility.
I mentioned earlier that the incident at Three Mile Island did not involve just a matter of ownership. That nuclear incident almost led to a catastrophe, and to this day, settlements have not been made in the civil courts for those who claim to have suffered injury.
Anyone considering investing in the British nuclear industry, particularly those intending to hold the shares for any length of time—that is another matter—should recognise that the insurable costs that he or she is likely to have to meet will grow year on year as the underwriters and the industry begin to understand that the risks cannot be properly quantified. The message that should go out is that insurance premiums will rise and there is likely to be an increasing liability on the industry in private hands to meet the unquantifiable risks attached to it.
The Secretary of State mentioned the £100 million dividend that will be provided early in the life of this privatisation. He said that it will come about because the industry has a healthy cash flow. It is true that the industry is generating cash, but the Secretary of State will surely recognise that, although the cash flow might appear to be large, it may not necessarily be positive when measured against the company's liabilities either on or off the balance sheet. Cash flow is simply a measure of ability to pay current bills, not past or future bills. In truth, the present liabilities, on a discounted basis or otherwise, are very large. That is why the Government have to make special arrangements to discount at an inappropriate rate.
It is estimated that, by some miracle—Treasury magic—£7 billion has been knocked off the cost of disposing of the liabilities. That has been done very simply. It is not a miracle and is not even a sleight of hand. It is no more than a cheap trick. The Government have changed the discount rate from 2 to 3 per cent. so that the liability is down from £21 billion to £14 billion. One can play that game for ever.
I was privileged to serve on the Committee that considered the Crossrail Bill. The Government became anxious about the liabilities, the costs and the payback on the investment and changed the discount rate the other way. They knocked it down from 8 to 6 per cent. to give a better cash flow. That is merely an accountants's manoeuvre—and they will do what they are told in the interest of serving their political masters. There has been jiggery-pokery in determining the liabilities of the industry.
I shall briefly discuss what the brokers have had to say about the privatisation. [Interruption.] I always listen to what they have to say. I like to see how the shares that I have not got would have been doing had I bought any.
I do not at all let the union do it for me.
Justin Urquhart-Stewart of Barclays said:
This is only for certain people because there are obvious risks. The business isn't even profitable yet.
That bears out what I was saying about paying the dividend from cash flow, which is fully committed before a dividend has been paid. He added:
Please Sids, don't enter this one.
Eric Hathorn of Henderson Crosthwaite expects stags to make a quick profit when trading starts in the middle of next month. That is because everyone is looking at the short term. No one wants to hold the stock for long; people know that the liabilities will catch up with them. It is good for the stags. Mr. Hathorn will not be classifying the stock as high-quality earnings. He says:
You cannot feel sure that you will get a steady growth in profits. And if anything goes wrong, you have a scare of BSE proportions.
If that is what the broking world says, other people should be careful.
Finally, decommissioning is a muddle. It was never properly explained or dealt with in the House or in Select Committee. It is estimated that decommissioning costs will amount to some £4 billion, according to the utility's estimates. However, the discounted cost, due to compounding, will be only £700 million. That is what the industry says. The Minister said something similar this evening.
Barclays de Zoete Wedd estimates that decommissioning costs will amount to 11 per cent. of nuclear liabilities. The discount is so large because the period in which funds can be compounded is very long—175 years. Put simply, that means that generations as yet unborn will pick up the price tag for the folly of the Government's privatisation plans for the nuclear industry. It is a special industry for which Government, and Government alone, should bear responsibility. There is no way the Government—in the immortal words of the late John Smith, the "Not me guy, Government"—will properly accept their responsibilities.
The typical lifetime of a modern nuclear power station is 40 years, with perhaps one or two extensions. That is followed by 135 years of decommissioning. That second period starts with three years to remove highly radioactive fuel elements, after which the plant must be left to cool for 130 years.
There are two counts to answer. The liabilities of the industry cannot be properly quantified; nor can the insurance risks. Responsibility for the industry lies solely with the Government of the day. Failure to take responsibility will be paid for not at the next general election, or even the one after, but by generations as yet unborn. That is the responsibility that the Government bear and the burden that they should consider. It is the reason that they should not press on with what they call the final burst, which, unfortunately, in historic language, may prove to be a final solution.
My hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase), in an excellent speech, referred to the reaction of some of the City brokers to this sale. I shall begin by quoting a comment that appeared in the Lex column of the Financial Times. It started wonderfully:
Go to a closing down sale, and you expect to pick up something cheap. Certainly, the final offering of the British government's great privatisation bazaar—British Energy, the nuclear generator—looks a classic bargain in the making. Inevitably, many investors will fall back on yield-based valuations which underrate the company's potential to gear up and churn out cash. Furthermore, daunted by British Energy's vulnerable revenues and heavy long-term liabilities, they may even demand a higher yield than even Railtrack fetched.
It is a disgrace that the House has not had the opportunity to debate this privatisation properly in Government time, as it did the privatisation of Railtrack. It is estimated that this privatisation will, in the short term, perhaps raise as much cash as that privatisation. We last debated nuclear privatisation in Opposition time on 26 March. Since then, our detailed questions on the financial deal and the details have never been properly answered. Indeed, as we have seen since the draft prospectus has been published, those questions are even more pertinent now than when we posed them on 26 March.
We still have not received a proper response from the Government on the Floor of the House to the Trade and Industry Select Committee's report on nuclear privatisation. The Government seem determined to push on with it regardless of the costs and, to some extent, in contempt of consideration in the House. Why? On 8 November 1989, the Government were totally opposed to any sale of the nuclear industry. The nuclear industry was withdrawn from the proposed privatisation of the electricity industry.
The then Minister declared in the House that retaining the nuclear industry in the public sector was
the best way of ensuring a long-term future for nuclear power in this country."—[Official Report, 8 November 1989; Vol. 159, c.1174.]
Those were the words of the Minister at the Dispatch Box. Now the Government, in a desperate dash for cash, are day by day sacrificing any long-term interests on the altar of the short-term cash fix, in a final bid to buy back what many of us now regard as their irretrievably lost popularity.
Let us recall the history. On 9 November 1989, the then Secretary of State for Energy, now Lord Wakeham, was adamant. He spoke about the unprecedented guarantees that were being sought by the City if privatisation was even mooted. He said:
I am not willing to underwrite the private sector in this way."— [Official Report, 9 November 1989; Vol. 159, c. 1171.]
Nuclear power stations were originally kept out of electricity privatisation precisely because, if the liabilities were to follow the assets, those power stations would be
totally unattractive to the market. The power stations would have been unsellable and the Government knew that.
So what did the Government have to do? They realised that they had to make nuclear power stations sellable, and did so by fudging the relationship between the liabilities and the assets and pushing as much as they could on to the public sector.
Ever since 4 March this year, when the marketing programme was launched, we have seen nothing but more and more underwriting, as each week has moved towards the final sell-off. New sweeteners have been revealed week by week to make the industry more acceptable to any prospective buyer. It has been the sweetener deal of the century.
Let us not forget that the Government are not privatising all the nuclear industry. That rather kills off the arguments of Conservative Members who have spoken in eulogistic terms about privatisation in principle. This is the Government who decided to privatise a bit of the nuclear industry. They are privatising the seven modern advanced gas-cooled reactors and the new pressurised water reactor, Sizewell B, which was opened only a few weeks ago. They are leaving the nine aging Magnox stations and BNFL behind, leaving all their liabilities in the public sector.
In other words, the Government are flogging off the current cash-generating end of the business, leaving behind in the public sector a large part of the liabilities for reprocessing spent fuel, decommissioning and shutting down nuclear plants, and the management, treatment and disposal of radioactive waste. All those irradiated liabilities are being left behind effectively in the public sector, yet we have repeatedly been told that yes, liabilities will follow assets.
Our opposition to the privatisation of the nuclear industry has been focused around the financing of the deal.
I wanted to put this point to the President of the Board of Trade, but he would not give way. Does my hon. Friend agree that the problem might be even worse than he has described because, in recent years, the Magnox stations have been run at an extremely high output level, thus bringing forward embrittlement problems, benefiting the Exchequer to the disadvantage of the new company? Does he think that the short-term attitude adopted by the company emphasises the way that it has appallingly abused a great asset of the country?
My hon. Friend pinpoints in detail the short-termism that is going on. He is absolutely right.
I add as a rider that all that we have seen from the Government and in the prospectus is based on a rosy, most optimistic possible assessment. My hon. Friend the Member for Clackmannan (Mr. O'Neill) said that the assumption of the load of the new industry sector was originally set at 82 per cent. for the seven AGRs and Sizewell B. Never in history has that figure been reached. I gather that the Government have dropped the figure to 75 per cent. now, but the best year's performance was 74 per cent., as my hon. Friend said.
Those are incredibly rosy assessments of what will happen to the privatised bit, but they are based, as my hon. Friend said, on what has been happening to what is left behind as a short-term deal to prime the industry for sell-off. In other words, the Government's nuclear sums are skewed in favour of a massively subsidised sweetener deal. That is the reality. Eight power stations are being sold off for less than the price of building one and taxpayers will be left with billions of pounds of nuclear liabilities well into the next century.
Let us look at some nuclear arithmetic. City estimates now say that the sale will raise £1.7 billion. The Government's original estimate was £2.6 billion, yet Sizewell B, the power station that has just been opened, cost £2.964 billion to build in March 1995 prices.
That power station was built from the proceeds of the nuclear levy that was stuck on to everyone's electricity bill, ostensibly to pay for the waste disposal of the liabilities. In other words, electricity consumers paid to build Sizewell B directly, although Parliament was never told about that. The French were, in the deal with the interconnector, but not Parliament.
Then what is revealed to us? On 13 June this year, not in this place but in the House of Lords, the Government conceded that the historic cost of the power station is £9.3 billion. Yes, we do know the difference between market cost and historic cost, but the historic cost does not magically disappear. Even the asset value of British Energy was written down by £1 billion from £6 billion to £5 billion between the publication of last year's accounts and the launch of the prospectus. That £1 billion disappeared from somewhere in the accounts.
In a written reply in May this year, the Minister told his colleague, the hon. Member for Colchester, South and Maldon (Mr. Whittingdale):
there has been a permanent diminution in the value of certain nuclear fixed assets of about £1.2 billion
since 31 March 1995. Furthermore, he said:
the fixed assets will stand in the balance sheet of British Energy at approximately £5 billion."—[Official Report,10 May 1996; Vol. 277, c. 295.]
That was the first time the Government admitted that they had marked down the price by £1 billion at public expense. The liabilities associated with the Magnox stations were valued at £8.5 billion by the Government at the time of the nuclear review, and they were to be met from the £2.6 billion built up from the value of the assets. Now we find that the AGR and PWR sale proceeds will be much less than £2.6 billion, so the shortfall is bound to fall on the general taxpayer.
In that written answer to which I just referred—one of those planted replies that gives us information if we look out for it on a wet Friday afternoon—the Minister said that taxpayers' liabilities would be capped at £3.8 billion—a maximum, not an estimated actual spend. It is reasonable to argue that any gap between the sale proceeds and the amount paid for by taxpayers in this way is a cost to taxpayers—of decommissioning Magnox stations—without the benefits of the revenue stream from the power stations that are being sold off.
I predict that, before many years are out, if the sale proceeds on the terms proposed by the Government, the Public Accounts Committee will find itself exposing a scandal of Pergau dam proportions, as the financial fixing that has gone into preparing British Energy for the market is revealed. My hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham), a member of the Select Committee with great expertise in those matters, used a wonderful parliamentary expression: the best that we can say about the figures, he said, is that the Government are being economical with the truth. My hon. Friend the Member for Wolverhampton, North-East spoke of accountancy manoeuvring. Both expressions accurately reflect what is going on.
Let us consider the liabilities for a moment, not forgetting that the Government are selling off only the more modern half of the industry. The Government promised that a shortfall in the decommissioning of the older Magnox stations would be met by the sale proceeds, not least because the older Magnox stations will lose the income from the newer nuclear generators. As the sale proceeds will be insufficient to cover the decommissioning costs, Ministers have loaded the £3.8 billion back on the taxpayer.
Certainly, the Government have set up a segregated sinking fund to deal with British Energy's liabilities; but while BE puts in £16 million a year, the public sector companies remaining behind will contribute £228 million after privatisation. In other words, British Energy's clean-up costs come in the form of a dowry—the Secretary of State's word. I understand that a dowry is a gift for setting up a new relationship. In this case, the Government will extract it from the balance sheets of the publicly owned nuclear companies.
I want to ask the Minister again for an answer to a question that we have regularly posed. Is he any clearer yet about the financial relationship between BNFL and the Magnox industry? The Government propose a merger, but neither knows what liabilities it will have to pick up. As Mark Baker of Magnox put it in his evidence to the Select Committee, he is still not fully aware of the eventual shape of his balance sheet.
This is a short-term, short-sighted financial fix—aptly advertised as a final burst of energy at the end of the Government's programme. Perhaps it is their last gasp before they disappear completely. The claims that we have heard tonight about cheaper electricity prices are pretty rich coming from the Conservative party, which slapped VAT on electricity bills. If they removed it, there would be much greater savings than there will be under this scheme.
The long-term future of British Energy remains the great unknown. Will the newly privatised entity continue to sell its electricity through the pool to the grid on privileged terms, or will it be asked to compete on an equal footing with other private generators? This week's Utility Week states:
British Energy faces the prospect of defaulting on a £500 million loan taken out with five banks as part of its leap into the private sector because of changes to rules … This could dent the profitability of the privatised company. Indeed BE's pathfinder prospectus said any Grid Code change having a 'material adverse effect' could be grounds for defaulting on the loan.
I would be interested to hear the Minister's comments on that. What about the dash for gas? It is suggested that British Energy will move away from nuclear energy and move into gas. Everyone is moving into gas, so its prospects as a competitor are being diminished.
No one believes that this is a good long-term investment. Recently, a stockbroker in Yorkshire tried to talk up the prospectus on the radio. He was asked whether he would buy shares and he said, "Certainly not in the long term." He was complimented on his honesty. He said that the shares would be of value only in the short term—that people with £300 to spare will buy on day one, but they will sell on day two and pick up a tidy sum on the way out. It is a subsidised sale.
The Government are selling off taxpayers' assets at a massively knocked-down price—they are trying to get as much liquid cash as they can to prime a pre-election tax bribe. This is a desperate last dash for cash. It should be called off because we will all pay for generations to come. Perhaps it is too late for the Government to call this off, but they ought to allow a party with a longer-term vision to put its prospectus before the British people and to call a general election.
I congratulate the right hon. and hon. Members who have attended the debate—greater men or women hath made no greater sacrifice than to attend the debate this evening. I have a little reservation about the judgment of the Labour Front Bench in choosing this topic at this time. I think that the Scots are more loyal to the alternative attractions than the English, and I can understand why.
It would have been helpful to the reputation of the hon. Member for Leeds, West (Mr. Battle) and of the House if the hon. Gentleman had made some elementary inquiries before writing his speech. He went on at some length about the absence of accounts for Magnox Electric—yet I have a copy of them in my hand. They were published, and well publicised, at the end of last week. A call to Magnox Electric or to my office would have revealed that, and I would have been delighted to pass them on to the hon. Gentleman.
The main theme of the Labour party's attack—if it can be called that—has been a reprise of the argument that it has used at every privatisation debate. The Labour party has opposed every privatisation over the past 17 years and it has used almost identical arguments every time—although even NERA has come up with a safety analysis that shows that the Labour party's safety scares in relation to privatisation have been ill founded.
We believe that privatisation is good for the customer, good for the company and for the shareholder, and good for the taxpayer. We believe that the privatisation of Nuclear Electric will be as successful as previous privatisations.
I have enjoyed one particular aspect of the debate. The hon. Member for Wolverhampton, North-East (Mr. Purchase) did something quite remarkable: he obviously sat down with the Financial Times and a great mound of brokers' circulars at his side last Sunday night and worked out the best investment opportunities for the Purchase household. He came across selective quotations from particular brokers, on the flotation of British Energy.
I welcome the hon. Gentleman to the capitalist world and to the world of wealth creation. I have a wonderful image of him up there in the north sitting behind his reproduction oak desk. Now that he is a modern new Labour man, perhaps he is linked to the Internet. If the reports were on the screen in front of him, he would not have to look through a great mound of documents. I have obviously impugned the hon. Gentleman, so I shall give way.
I am delighted with that rewriting of history. I wish the hon. Gentleman well in his new career as a stock market analyst—I am sure that it will enhance his prospects under new Labour.
Safety was a recurring theme in hon. Members' speeches. I make it absolutely clear that there is no way in which the Government or the company will imperil safety. While I was absent from the Chamber, I understand that the hon. Member for Barnsley, West and Penistone (Mr. Clapham) referred to today's Guardian article. The story was totally predictable—only yesterday afternoon, I guessed that The Guardian would run another nuclear scare story this morning. True to form, it did just that and, true to form, that story proved to be as unfounded as the previous ones.
What I found particularly reprehensible about the article—I understand that the hon. Gentleman referred to this point—was its reference to the national average risk of dying from cancer. It is true that, nationally, the average risk of dying from cancer is one in four. However, in practice and as a matter of fact, it is not the case that nuclear workers are at a greater risk of contracting cancer. Research shows categorically that average cancer rates among workers in the nuclear industry are below the national average. It does the hon. Gentleman no credit to repeat such a scare story.
I raised that statistic in the context of liabilities for common law damages. The article in The Guardian said that, by the end of the century, probably 200 people per year would have a common law claim against the nuclear industry. Therefore, I ask whether there is a no-fault scheme. How do the Government intend to replace that scheme? If we are talking about an average of £20,000 per claim, that amounts to a big liability of about £4 million per year. If that is the case, the information should have been in the prospectus.
The hon. Gentleman is stating, at least implicitly, that cancer is caused by working in the nuclear industry. There is no evidence that that is so. Whatever other debates we may have about the nuclear industry, it does no one any good to promulgate such a scare story.
The hon. Member for Leeds, West referred to statements by my noble Friend Lord Wakeham in November 1989. It is quite true: we decided at that time that it was not in the taxpayers' interest to sell the nuclear industry. It is a great credit to the management and the employees—including the trade unions—in the nuclear industry that they improved the efficiency and the productivity of that industry so that it can now be privatised, with good returns for the taxpayer and benefits for those same employees.
I will not give way. The hon. Gentleman did not sit through the debate.
I must repeat again that liabilities have followed assets in the proposals for the sale of British Energy. We have made it clear in the past that that will happen, and I repeat quite categorically and unreservedly that liabilities will follow assets and that British Energy is responsible and will remain responsible for the liabilities that are associated with its stations.
The right hon. Member for Derby, South (Mrs. Beckett) and the hon. Member for Leeds, West made two particular criticisms. They accused the Government of setting the dividend at too high a level and, almost in the same breath, criticised us for selling British Energy too cheaply. New Labour claims to be the friend of industry and, like the hon. Member for Wolverhampton, North-East, to have learned how financial markets work. It has, however, failed to grasp a very simple point. All other things being equal, a higher dividend being paid by the company increases its value, and in contradistinction, a lower dividend decreases its value. That simple fact means that the Government cannot at the same time be setting too high a dividend, which was one accusation, and simultaneously be selling the company too cheaply. Almost all companies are valued in relation to a multiple of the dividend that is being paid.
The hon. Member for Leeds, West simply does not understand the difference between profits in accounting terms and cash flow. It is up to the directors of the company to decide what they can afford to pay in dividends. As a general rule, from the taxpayers' point of view, the higher the dividend, the higher the proceeds that will be realised. The hon. Gentleman must understand that, by arguing for lower dividends, he is in effect arguing for lower proceeds for the taxpayer. He may not understand that, but it is an irrefutable fact, and it would be welcome if he admitted it.
When I first entered the House back in 1979, the Government owned the gas industry, the electricity industry, the coal industry and, in practice, much of the United Kingdom's rapidly expanding oil industry. As my hon. Friend the Member for North-West Surrey (Sir M. Grylls) said, in effect Ministers decided prices and made investment decisions. Those great utility industries were in practice cynically used as part of micro-economic decision taking by—one regrets to say—Governments of both major parties. As my right hon. Friend the President of the Board of Trade said, under Labour, that system gave us 2 per cent. increases in electricity prices on a six-weekly basis. As he also said, it meant that taxpayers paid £50 million a week in subsidies rather than receiving £55 million a week in taxes as they do now.
In practice, back in 1979, the Government decided what energy we should be provided with in our homes and what we should pay for it. That is all behind us. The sale of British Energy completes the privatisation of the energy sector. The benefits of that privatisation programme for customers are there for all to see. We in Britain have led the world in creating competitive energy markets. This privatisation shows that we are maintaining that lead.
The Opposition have opposed the privatisation of the nuclear industry, just as they have opposed every other privatisation. They said that electricity privatisation would mean that prices would rise. In practice and in fact, prices have fallen. They said that nuclear privatisation would saddle the taxpayer with huge liabilities and compromise safety. In fact, liabilities will follow assets into the private sector and everybody has made it clear that safety will continue to be paramount.
Privatisation is good for the company, for shareholders, for employees and for consumers, who will benefit from increased competition and from more downward pressure on prices. Privatisation is good for the taxpayer, who will benefit from significant proceeds and a substantial reduction in the cost of liabilities left in the public sector.
I ask the House to support the Government's amendment.
|Division No. 152]||[10.00 pm|
|Adams, Mrs Irene||Davis, Terry (B'ham, H'dge H'l)|
|Ainger, Nick||Denham, John|
|Ainsworth, Robert (Cov'try NE)||Dewar, Donald|
|Allen, Graham||Dixon, Don|
|Anderson, Donald (Swansea E)||Dowd, Jim|
|Armstrong, Hilary||Dunwoody, Mrs Gwyneth|
|Barron, Kevin||Eastham, Ken|
|Battle, John||Etherington, Bill|
|Bayley, Hugh||Fatchett, Derek|
|Beckett, Rt Hon Margaret||Faulds, Andrew|
|Benn, Rt Hon Tony||Field, Frank (Birkenhead)|
|Bennett, Andrew F||Flynn, Paul|
|Benton, Joe||Forsythe, Clifford (S Antrim)|
|Bermingham, Gerald||Foster, Rt Hon Derek|
|Berry, Roger||Foster, Don (Bath)|
|Blunkett, David||Fraser, John|
|Boateng, Paul||Fyfe, Maria|
|Bradley, Keith||Galbraith, Sam|
|Bray, Dr Jeremy||Gapes, Mike|
|Brown, Gordon (Dunfermline E)||Garrett, John|
|Brown, N (N'c'tle upon Tyne E)||Gerrard, Neil|
|Burden, Richard||Godman, Dr Norman A|
|Byers, Stephen||Godsiff, Roger|
|Callaghan, Jim||Golding, Mrs Llin|
|Campbell, Mrs Anne (C'bridge)||Gordon, Mildred|
|Campbell, Menzies (Fife NE)||Graham, Thomas|
|Campbell, Ronnie (Blyth V)||Grant, Bernie (Tottenham)|
|Campbell-Savours, D N||Griffiths, Nigel (Edinburgh S)|
|Canavan, Dennis||Griffiths, Win (Bridgend)|
|Cann, Jamie||Grocott, Bruce|
|Carlile, Alexander (Montgomery)||Gunnell, John|
|Chidgey, David||Hain, Peter|
|Chisholm, Malcolm||Hanson, David|
|Church, Judith||Hardy, Peter|
|Clapham, Michael||Harman, Ms Harriet|
|Clark, Dr David (South Shields)||Hattersley, Rt Hon Roy|
|Clarke, Tom (Monklands W)||Hill, Keith (Streatham)|
|Clelland, David||Hinchliffe, David|
|Clwyd, Mrs Ann||Hodge, Margaret|
|Cohen, Harry||Hood, Jimmy|
|Connarty, Michael||Howarth, Alan (Strat'rd-on-A)|
|Corbett, Robin||Howarth, George (Knowsley North)|
|Corbyn, Jeremy||Howells, Dr Kim (Pontypridd)|
|Cousins, Jim||Hoyle, Doug|
|Cox, Tom||Hughes, Kevin (Doncaster N)|
|Cummings, John||Hughes, Robert (Aberdeen N)|
|Cunliffe, Lawrence||Hughes, Roy (Newport E)|
|Dafis, Cynog||Hughes, Simon (Southward)|
|Dalyell, Tam||Ingram, Adam|
|Darling, Alistair||Jackson, Glenda (H'stead)|
|Davies, Bryan (Oldham C'tral)||Jackson, Helen (Shef'ld, H)|
|Davies, Chris (L'Boro & S'worth)||Jamieson, David|
|Davies, Rt Hon Denzil (Llanelli)||Janner, Greville|
|Jenkins, Brian (SE Staff)||Pickthall, Colin|
|Jones, Ieuan Wyn (Ynys Môn)||Pike, Peter L|
|Jones, Jon Owen (Cardiff C)||Pope, Greg|
|Jones, Lynne (B'ham S O)||Powell, Sir Ray (Ogmore)|
|Jones, Martyn (Clwyd, SW)||Prentice, Bridget (Lew'm E)|
|Jones, Nigel (Cheltenham)||Prentice, Gordon (Pendle)|
|Jowell, Tessa||Primarolo, Dawn|
|Kennedy, Charles (Ross,C&S)||Purchase, Ken|
|Kennedy, Jane (L'pool Br'dg'n)||Quin, Ms Joyce|
|Khabra, Piara S||Radice, Giles|
|Kilfoyle, Peter||Randall, Stuart|
|Lestor, Joan (Eccles)||Raynsford, Nick|
|Lewis, Terry||Reid, Dr John|
|Liddell, Mrs Helen||Rendel, David|
|Litherland, Robert||Robertson, George (Hamilton)|
|Livingstone, Ken||Robinson, Geoffrey (Co'try NW)|
|Lloyd, Tony (Stretford)||Roche, Mrs Barbara|
|Llwyd, Elfyn||Rooker, Jeff|
|Loyden, Eddie||Rooney, Terry|
|Lynne, Ms Liz||Ross, Ernie (Dundee W)|
|McAllion, John||Ross, William (E Londonderry)|
|McAvoy, Thomas||Rowlands, Ted|
|McCartney, Ian||Sheerman, Barry|
|Macdonald, Calum||Shore, Rt Hon Peter|
|McFall, John||Short, Clare|
|McKelvey, William||Simpson, Alan|
|Mackinlay, Andrew||Skinner, Dennis|
|McLeish, Henry||Smith, Andrew (Oxford E)|
|Maclennan, Robert||Smith, Llew (Blaenau Gwent)|
|McNamara, Kevin||Snape, Peter|
|MacShane, Denis||Soley, Clive|
|Madden, Max||Spellar, John|
|Maddock, Diana||Squire, Rachel (Dunfermline W)|
|Mahon, Alice||Steel, Rt Hon Sir David|
|Mandelson, Peter||Steinberg, Gerry|
|Marek, Dr John||Stevenson, George|
|Marshall, David (Shettleston)||Stott, Roger|
|Marshall, Jim (Leicester, S)||Strang, Dr. Gavin|
|Martin, Michael J (Springburn)||Sutcliffe, Gerry|
|Martlew, Eric||Taylor, Matthew (Truro)|
|Maxton, John||Thompson, Jack (Wansbeck)|
|Meacher, Michael||Tipping, Paddy|
|Meale, Alan||Touhig, Don|
|Michael, Alun||Turner, Dennis|
|Michie, Bill (Sheffield Heeley)||Tyler, Paul|
|Michie, Mrs Ray (Argyll & Bute)||Vaz, Keith|
|Milburn, Alan||Walker, Rt Hon Sir Harold|
|Miller, Andrew||Wallace, James|
|Mitchell, Austin (Gt Grimsby)||Walley, Joan|
|Moonie, Dr Lewis||Wardell, Gareth (Gower)|
|Morgan, Rhodri||Welsh, Andrew|
|Morley, Elliot||Wicks, Malcolm|
|Morris, Rt Hon Alfred (Wy'nshawe)||Wigley, Dafydd|
|Morris, Estelle (B'ham Yardley)||Williams, Rt Hon Alan (Sw'n W)|
|Morris, Rt Hon John (Aberavon)||Williams, Alan W (Carmarthen)|
|Mowlam, Marjorie||Wilson, Brian|
|Mudie, George||Winnick, David|
|Mullin, Chris||Wise, Audrey|
|Murphy, Paul||Worthington, Tony|
|O'Brien, Mike (N W'kshire)||Wray, Jimmy|
|O'Brien, William (Normanton)||Wright, Dr Tony|
|O'Hara, Edward||Young, David (Bolton SE)|
|O'Neill, Martin||Tellers for the Ayes:|
|Orme, Rt Hon Stanley||Ms Ann Coffey and Ms Janet Anderson.|
|Ainsworth, Peter (East Surrey)||Arnold, Jacques (Gravesham)|
|Aitken, Rt Hon Jonathan||Atkins, Rt Hon Robert|
|Alexander, Richard||Atkinson, David (Bour'mouth E)|
|Atkinson, Peter (Hexham)|
|Alison, Rt Hon Michael (Selby)||Baker, Nicholas (North Dorset)|
|Allason, Rupert (Torbay)||Baldry, Tony|
|Amess, David||Banks, Matthew (Southport)|
|Arbuthnot, James||Banks, Robert (Harrogate)|
|Bates, Michael||Freeman, Rt Hon Roger|
|Batiste, Spencer||Fry, Sir Peter|
|Bellingham, Henry||Gale, Roger|
|Bendall, Vivian||Gardiner, Sir George|
|Beresford, Sir Paul||Garel-Jones, Rt Hon Tristan|
|Biffen, Rt Hon John||Garnier, Edward|
|Body, Sir Richard||Gill, Christopher|
|Bonsor, Sir Nicholas||Goodlad, Rt Hon Alastair|
|Booth, Hartley||Goodson-Wickes, Dr Charles|
|Boswell, Tim||Gorman, Mrs Teresa|
|Bottomley, Peter (Eltham)||Gorst, Sir John|
|Bottomley, Rt Hon Virginia||Grant, Sir A (SW Cambs)|
|Bowden, Sir Andrew||Greenway, Harry (Ealing N)|
|Bowis, John||Griffiths, Peter (Portsmouth, N)|
|Boyson, Rt Hon Sir Rhodes||Grylls, Sir Michael|
|Brandreth, Gyles||Gummer, Rt Hon John|
|Brazier, Julian||Hague, Rt Hon William|
|Bright, Sir Graham||Hamilton, Neil (Tatton)|
|Brooke, Rt Hon Peter||Hampson, Dr Keith|
|Brown, M (Brigg & Cl'thorpes)||Hannam, Sir John|
|Browning, Mrs Angela||Hargreaves, Andrew|
|Bruce, Ian (South Dorset)||Hawkins, Nick|
|Butcher, John||Hawksley, Warren|
|Butler, Peter||Hayes, Jerry|
|Butterfill, John||Heald, Oliver|
|Carlisle, John (Luton North)||Heathcoat-Amory, Rt Hon David|
|Carrington, Matthew||Hendry, Charles|
|Carttiss, Michael||Heseltine, Rt Hon Michael|
|Cash, William||Higgins, Rt Hon Sir Terence|
|Channon, Rt Hon Paul||Hill, Sir James (Southampton Test)|
|Chapman, Sir Sydney||Hogg, Rt Hon Douglas (G'tham)|
|Churchill, Mr||Horam, John|
|Clappison, James||Hordern, Rt Hon Sir Peter|
|Clark, Dr Michael (Rochford)||Howell, Rt Hon David (G'dford)|
|Clifton-Brown, Geoffrey||Howell, Sir Ralph (N Norfolk)|
|Coe, Sebastian||Hughes, Robert G (Harrow W)|
|Congdon, David||Hunt, Rt Hon David (Wirral W)|
|Conway, Derek||Hunt, Sir John (Ravensbourne)|
|Coombs, Anthony (Wyre For'st)||Hunter, Andrew|
|Coombs, Simon (Swindon)||Hurd, Rt Hon Douglas|
|Cope, Rt Hon Sir John||Jack, Michael|
|Cormack, Sir Patrick||Jenkin, Bernard|
|Couchman, James||Jessel, Toby|
|Cran, James||Johnson Smith, Sir Geoffrey|
|Currie, Mrs Edwina (S D'by'ire)||Jones, Gwilym (Cardiff N)|
|Curry, David (Skipton & Ripon)||Jones, Robert B (W Hertfdshr)|
|Davis, David (Boothferry)||Kirkhope, Timothy|
|Day, Stephen||Knight, Mrs Angela (Erewash)|
|Deva, Nirj Joseph||Knight, Rt Hon Greg (Derby N)|
|Devlin, Tim||Knight, Dame Jill (Bir'm E'st'n)|
|Dorrell, Rt Hon Stephen||Knox, Sir David|
|Douglas-Hamilton, Lord James||Kynoch, George (Kincardine)|
|Dover, Den||Lait, Mrs Jacqui|
|Duncan, Alan||Lang, Rt Hon Ian|
|Duncan Smith, Iain||Leigh, Edward|
|Dunn, Bob||Lennox-Boyd, Sir Mark|
|Durant, Sir Anthony||Lester, Sir James (Broxtowe)|
|Dykes, Hugh||Lidington, David|
|Eggar, Rt Hon Tim||Lloyd, Rt Hon Sir Peter (Fareham)|
|Emery, Rt Hon Sir Peter||Lord, Michael|
|Evans, David (Welwyn Hatfield)||Luff, Peter|
|Evans, Jonathan (Brecon)||MacGregor, Rt Hon John|
|Evans, Nigel (Ribble Valley)||MacKay, Andrew|
|Evans, Roger (Monmouth)||Maclean, Rt Hon David|
|Evennett, David||McLoughlin, Patrick|
|Faber, David||McNair-Wilson, Sir Patrick|
|Fabricant, Michael||Maitland, Lady Olga|
|Fenner, Dame Peggy||Major, Rt Hon John|
|Field, Barry (Isle of Wight)||Malone, Gerald|
|Fishburn, Dudley||Marland, Paul|
|Forman, Nigel||Marlow, Tony|
|Forsyth, Rt Hon Michael (Stirling)||Marshall, John (Hendon S)|
|Forth, Eric||Martin, David (Portsmouth S)|
|Fowler, Rt Hon Sir Norman||Merchant, Piers|
|Fox, Dr Liam (Woodspring)||Mills, Iain|
|Fox, Rt Hon Sir Marcus (Shipley)||Mitchell, Andrew (Gedling)|
|Mitchell, Sir David (NW Hants)||Spink, Dr Robert|
|Moate, Sir Roger||Spring, Richard|
|Monro, Rt Hon Sir Hector||Sproat, Iain|
|Needham, Rt Hon Richard||Squire, Robin (Hornchurch)|
|Nelson, Anthony||Stanley, Rt Hon Sir John|
|Neubert, Sir Michael||Stephen, Michael|
|Newton, Rt Hon Tony||Stewart, Allan|
|Nicholls, Patrick||Streeter, Gary|
|Nicholson, David (Taunton)||Sumberg, David|
|Norris, Steve||Sweeney, Walter|
|Onslow, Rt Hon Sir Cranley||Sykes, John|
|Oppenheim, Phillip||Tapsell, Sir Peter|
|Ottaway, Richard||Taylor, Ian (Esher)|
|Page, Richard||Taylor, John M (Solihull)|
|Paice, James||Taylor, Sir Teddy (Southend, E)|
|Patnick, Sir Irvine||Temple-Morris, Peter|
|Pattie, Rt Hon Sir Geoffrey||Thomason, Roy|
|Pawsey, James||Thompson, Sir Donald (C'er V)|
|Peacock, Mrs Elizabeth||Thompson, Patrick (Norwich N)|
|Pickles, Eric||Thornton, Sir Malcolm|
|Porter, Barry (Wirral S)||Thurnham, Peter|
|Porter, David (Waveney)||Townend, John (Bridlington)|
|Portillo, Rt Hon Michael||Townsend, Cyril D (Bexl'yh'th)|
|Powell, William (Corby)||Tredinnick, David|
|Rathbone, Tim||Trend, Michael|
|Redwood, Rt Hon John||Twinn, Dr Ian|
|Renton, Rt Hon Tim||Vaughan, Sir Gerard|
|Richards, Rod||Walden, George|
|Riddick, Graham||Waller, Gary|
|Rifkind, Rt Hon Malcolm||Ward, John|
|Robathan, Andrew||Wardle, Charles (Bexhill)|
|Robert, Rt Hon Sir Wyn||Waterson, Nigel|
|Robinson, Mark (Somerton)||Watts, John|
|Roe, Mrs Marion (Broxbourne)||Wells, Bowen|
|Rowe, Andrew (Mid Kent)||Wheeler, Rt Hon Sir John|
|Rumbold, Rt Hon Dame Angela||Whitney, Ray|
|Sackville, Tom||Whittingdale, John|
|Sainsbury, Rt Hon Sir Timothy||Widdecombe, Ann|
|Scott, Rt Hon Sir Nicholas||Wiggin, Sir Jerry|
|Shaw, David (Dover)||Wilkinson, John|
|Shephard, Rt Hon Gillian||Willetts, David|
|Shepherd, Sir Colin (Hereford)||Wilshire, David|
|Shepherd, Richard (Aldridge)||Winterton, Mrs Ann (Congleton)|
|Sims, Sir Roger||Winterton, Nicholas (Macc'fld)|
|Skeet, Sir Trevor||Wolfson, Mark|
|Smith, Sir Dudley (Warwick)||Yeo, Tim|
|Soames, Nicholas||Young, Rt Hon Sir George|
|Speed, Sir Keith|
|Spencer, Sir Derek||Tellers for the Noes:|
|Spicer, Sir James (W Dorset)||Mr. Timothy Wood and Mr. Simon Burns.|
|Spicer, Sir Michael (S Worcs)|
That this House welcomes the publication of the Pathfinder prospectus for the sale of British Energy which confirms that the sale fulfils the Government's commitment to ensuring that liabilities follow assets into the private sector and is a good deal for the taxpayer who will benefit from equity proceeds, debt repayment and the permanent transfer to the private sector of responsibility for almost £4 billion of nuclear liabilities, for British Energy employees who will now have the opportunity to take a real stake in the future of their industry, for Magnox Electric which will be a robust public sector company capable of meeting its liabilities as they fall due; and further notes that the privatisation of British Energy serves the long term interests of the taxpayer, the industry, and consumers; and condemns the persistent attempts by the Opposition to undermine this and other privatisations.