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Nuclear Power

Part of the debate – in the House of Commons at 8:42 pm on 22nd October 2002.

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Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry) 8:42 pm, 22nd October 2002

I am coming to that point. [Laughter.] Hon. Members must be patient, because we need to develop the argument logically.

When did the Government realise the extent of British Energy's difficulties? The fact that British Energy was trading at a loss must have been clear to the Minister's advisers well before 9 September. When did British Energy first discuss its anxieties with officials in the Minister's Department? Did not those discussions start months before the crisis package was announced on 9 September? Was not the first advice that his Department sensibly gave to British Energy to go away and discuss with BNFL a renegotiation of the high reprocessing costs that British Energy pays? Can the Minister confirm that those discussions between British Energy and BNFL took place and that an agreement was reached, but that the deal was unfortunately blocked, not by him or his officials but by the Treasury?

Apart from the reprocessing costs, the other big burden that has been imposed on British Energy is the climate change levy. On this point, I agree with the hon. Member for Twickenham. The climate change levy is not a climate change levy, but simply a clumsy and arbitrary energy tax that has nothing to do with climate change. If it did have anything to do with climate change, it would not be applied to British Energy. It is time the Government stopped insulting the intelligence of the energy industry and calling the levy a climate change levy.

It is also time to recognise that there are better ways to encourage reductions in carbon dioxide emissions. Those reductions would ensure that the resources were applied where they would be most effective. That could be achieved by means of a carbon tax, and an emissions trading system that was fully compatible with what will be introduced in Europe.

Does the Minister agree that the cost of supporting British Energy would be much lower if the Government were to allow the company to negotiate freely a new deal with BNFL, and if the Government replaced the climate change levy with a mechanism that directly targeted the carbon dioxide problem?

In that context, I make it clear that the cost of propping up British Energy in the short term could be much lower if the Government were to adopt the measures that I have set out. However, even at #650 million, that cost is lower than would be the decommissioning cost that would fall on the public sector if British Energy were closed down immediately. That cost could not be met by a company whose financial difficulties are as obvious as British Energy's, and it would dwarf the #650 million that has been put in.

That in no way, however, reduces my concern about the delay that is taking place. The matter should be resolved urgently, and I have made two practical suggestions about how the burden could be reduced. To be fair to British Energy, if it must bear the decommissioning and waste disposal costs, it is entitled to have its contribution to helping Britain achieve its climate change commitments recognised. Unfortunately, not everyone is willing to give it that recognition.

The Minister has not yet made clear the Government's solution to the problem. When he winds up, I hope that he will explain to the House what Project Blue is, and whether the Government are examining the possibility of taking British Energy back into public ownership. If he does confirm that, will he explain how that will help reduce the costs that British Energy faces? The problem is that market prices are lower than the costs of production, and that does not have to do with who owns the shares.