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6 Feb 2003 : Column 480—continued
Mr. O'Neill: The hon. Gentleman is working on an assumption that he has not explained or thought through. He seems to think that the maintenance costs and the safety obligations diminish as a power station reaches the end of its life, but the opposite is true. We must have proper safety at great expense right up to the moment when the power station closes. There is never a taper. The idea that the financial requirement will diminish is wrong because it will be roughly the same, allowing for inflation, right up to when we say that there
is no more need to put fuel rods into a station. That is why substantial sums need to be provided. It does not preclude investment or require investment in new build.
Mr. Weir: That makes no difference to the fact that the taxpayer will pick up the tab whichever way we go. It does not make any difference whether the taxpayer pays to keep British Energy going in the private sector or in the public sector by effectively renationalising it. If the plants are to close anyway, that cost has to be met. There is no reason to keep it in the private sector unless there is a prospect of expanding nuclear power.
A possible problem with the European Union has been mentioned. In an e-mail this afternoon—perhaps other hon. Members also received it—Greenpeace reassesses the European Commission's decision, although I am sure that the Minister will not accept what it says as gospel. Greenpeace says that the decision
- "underlines the requirement that aid drawn down from the loan facility must be the minimum necessary amount to keep the firm in business for the rescue period".
3 pm
Dr. Ladyman: Has the hon. Gentleman not demonstrated why this group of amendments is unnecessary? The European Commission is likely to rule that any amount of money put in by the Government has to be the minimum amount necessary. If the Government exceed that, it would be illegal under European law. We therefore do not need the amendments, which tie the Government's hands.
Mr. Weir: The minimum amount will vary, depending on whether the company stays in the private sector or goes into administration. If I understood the hon. Member for Twickenham correctly, the preferred option in the amendments is for the company to go into administration. That would be the best deal for the taxpayer, and I believe that it is more likely to ensure the eventual decommissioning of those stations and stop the expansion of nuclear power. I therefore support the hon. Gentleman's amendments.
Mr. Andrew Stunell (Hazel Grove): I want to draw the attention of Committee members to amendments Nos. 14 and 15, which are similar in intention to amendment No. 26, which was tabled by the hon. Member for Bury, North (Mr. Chaytor). Our amendments aim to prevent the creation of a hidden or circular subsidy between BNFL and British Energy. A number of Members have already asked whether British Energy is capable of making money if historic costs and/or future liabilities are written off. That debate clearly requires a good deal of technical exploration, because the figures can be interpreted differently. At the beginning of 2002, British Energy's production costs were about £20 a megawatt-hour, but by the end of last year, they were down to £18.50, compared with a wholesale price of about £16 a
megawatt-hour. The company was apparently running at a loss all last year, but a lot depends on future costs and prices. Amendments Nos. 14 and 15 do not address that directly.
Mr. Blunt: We are obviously entering an area in which Members cannot claim to be experts. In its annual review, British Energy claimed that its operating costs had already been driven down to £16.70 a megawatt-hour, and said that it aimed to get them down to £16 a megawatt-hour. When I visited its plant at Heysham, I was told that that included depreciation costs, which suggests that when liabilities and depreciation are taken away, the costs are significantly less. British Energy therefore generates cash now, and if the electricity price returns to the long-run cost of generators, it would make a significant amount of cash.
Mr. Stunell: I am grateful to the hon. Gentleman, who has underlined the point that the figures are open to interpretation. When one is looking at costs, as anyone who has attempted to run a business will know, the final figures depend on what is included and excluded. I do not base my case on any particular interpretation of prices, but simply wish to make the point that the rescue package—if that is what it is—must be based on the best available information. Some information could be seriously affected by the potential cross-subsidy between BNFL and British Energy in the reprocessing contracts. The hon. Member for Bury, North has already referred to that, and there have been difficult negotiations between the two companies over the past 12 months. In fact, the failure of negotiations was the trigger for British Energy to approach the Government and make it clear that it was in grave financial difficulties.
We must remember that BNFL is a wholly Government-owned enterprise which, financially, is on the brink. It could not afford to release British Energy from its contracts—had it done so, that would have pushed it over the brink, rather than British Energy. There are therefore two companies on the brink tussling over a contract. How convenient for the Government and perhaps the Department of Trade and Industry if negotiations between those two companies did not result in a reduction in the cost to British Energy but in an increase in the price paid for reprocessing. Suppose it went up from £250 million to £350 million or £500 million—there is nothing in the Bill to prevent the money injected into British Energy from being used to support that contract, whatever value the negotiations achieve. We have tabled subsequent amendments that address the issue of a ceiling on the amount of subsidy and input that the Government can provide.
The intention of our amendments is to establish with the Government the possibility of a cross-subsidy or circular subsidy that would indirectly rescue BNFL as well as rescuing British Energy. In our view, the contracts that were entered into were foolish—unnecessary work was commissioned, and excessive and pointless amounts of nuclear work have been created. To leave a loophole in the legislation—the failings of the reprocessing concept and BNFL's financial weakness, which could be covered up by additional subsidies pumped through in distorted contracts and prices—would make a bad commercial and environmental situation even worse. That is why we tabled
amendments Nos. 14 and 15, and I shall certainly support the amendment tabled by the hon. Member for Bury, North.
Mr. Wilson: I urge the Committee to resist the amendments. I was interested in the comment by my hon. Friend the Member for Bury, North (Mr. Chaytor) that there is ambiguity about the pros and antis in this debate. Some people are anti-nuclear, but pro the legislation, and vice versa. I recall that there was an ostensible ambiguity at the time of nuclear privatisation. As someone who opposed nuclear privatisation, I remember very well that it was supported by Greenpeace and kindred spirits, as they thought that privatisation would damage nuclear so much that its demise would be hastened. One reason why I am cynical about Greenpeace is that it keeps starting court cases for which it gets cheap publicity before abandoning them in less publicised ignominy. As someone who, for all the right reasons, did not think that British Energy should ever have been privatised, I believe that Greenpeace, for all the wrong reasons, supported something that was greatly against the public interest.
The hon. Member for Hazel Grove (Mr. Stunell) has just painted a rather bizarre scenario, and if I was as big a conspiracy theorist as him, I might imagine that the Tories were in league with Greenpeace and all sorts of dark forces, and that the whole business of privatising British Energy was a long-term conspiracy. However, I relieve the Tories and the predecessors of the hon. Member for Reigate (Mr. Blunt) of that charge—I just think that they were stupid, short-sighted, dogmatic and, above all, greedy in privatising the nuclear industry.
Mr. Wilson: Which of those four qualities does the hon. Gentleman wish to comment on?
Mr. Blunt: I thought that I would contest the charge of greed. The Minister said that the company was sold by the taxpayer and has now gone into the private sector. The shareholders and bondholders who lent the company money now appear to have lost all their money. Far from being greedy, my predecessors successfully protected the taxpayer's interest.
Mr. Wilson: I do not want to go too deeply into the matter, but what that analysis omits is the causal relationship between the problems of British Energy and the privatisation, which some people foresaw at the time from different perspectives, and the impossibility of unleashing into a privatised and liberalised market a nuclear company which, for all the right reasons, has irreducible minimum costs.
We have taken up the debate where we left off. Opposition Members, as is their right and duty, are sniffing around in search of a better way, but none of them can argue convincingly for a better way than the one that we propose. Because restructuring and administration are postulated as opposites, Opposition Members have to support administration in order to oppose restructuring. That takes them down a rather
curious route. In the case of the Tories, they have to believe that it is better for the company to end up in public ownership than for it to be given a chance to survive in the private sector, but that is for them to sort out.
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