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Lord Ezra: My Lords, I, too, thank the noble Earl for repeating the Statement. I wish to declare that I am chairman of a group of energy companies, which includes one which provides advisory services on electricity.

I should like to put a number of questions to the noble Earl. First, why are the Government convinced that they can be more successful this time in selling off the nuclear enterprises than they were in 1989? The Statement referred to that, and the Government seem to believe that they will be successful. However, are the financial institutions convinced? Will it be necessary, in order to convince them, to sell off the assets at a relatively low price? There have been indications of that having been done in the past.

Secondly, the form which the privatisation is intended to take, which was raised by the noble Lord, Lord Peston, also puzzles me. According to press reports an argument raged as to whether the industry should be privatised as a whole, in which case there could have been benefits of scale, or privatised separately, in which case there could have been benefits of competition. If the industry is privatised as now proposed neither the benefits of scale

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nor the benefits of competition can be achieved. The holding company will supervise two quite separate enterprises which will continue, as before, with their relative market shares. There will therefore be no competition between them, and presumably no rationalisation. That does not seem to me to be a sensible proposition. Perhaps the noble Earl can convince us otherwise.

Thirdly, I listened with care to what the Statement had to say about the levy. It does not appear that the levy as a whole will be removed but only that part of it relating to Nuclear Electric and the special arrangements relating to Scottish Nuclear. That implies that some part of the levy will continue, presumably that which relates to the Magnox stations and, I presume also, that which relates to stimulating renewable energy. According to my calculations that probably represents about 20 per cent. of the levy. Will the noble Earl indicate whether that is correct and whether that will continue until 1998 or for a period beyond that?

Fourthly, I presume that the decommissioning fund will take the form of an amount of money which will be among the assets which will be sold on privatisation. Can we be assured that there will not be some corresponding reduction in the value of the other assets to be sold in order to make that proposition more palatable? I hope that the noble Earl will agree, on the basis of past performance in respect of sales of the public utilities, that we are entitled to have some doubts about the value which will be placed on those assets as a whole when offered for sale.

Finally, like the noble Lord, Lord Peston, I return to the question of safety. Quite rightly, the Statement emphasises the importance of safety. However, can the noble Earl say whether the Nuclear Installations Inspectorate will be given all the time it needs in order to prepare for adequate licences for the private operation of these installations? The public must be absolutely convinced beyond any possible doubt that there will be no conceivable relaxation of safety standards on the privatisation of the nuclear industry.

Earl Ferrers: My Lords, I am grateful to both noble Lords for the remarks they have made about the Statement. The noble Lord, Lord Peston, said that it was interesting and exceedingly difficult to understand. I agree that it is a highly complicated matter. The noble Lord therefore said that he found it difficult to speak on the subject. Having said that, he did not do too badly. He asked a number of penetrating questions, which I shall do my best to answer as succinctly as possible without discourtesy to the noble Lord or the House.

The noble Lord complained that there was no debate. That is a matter for the usual channels. I agree with him that this would be a most inappropriate form of debate as your Lordships have not seen the White Paper. Therefore, this is necessarily only a cursory response to the fact that the Government have announced that they are issuing a White Paper.

The noble Lord, Lord Peston, asked whether the proposals would require legislation. He was right: they will not require legislation.

The noble Lord referred to the fact that the Statement said that it was not correct to distort the electricity industry by subsidy. He questioned whether that meant

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that the Government had no interest in the future composition of the electricity industry. It is the Government's view that it is the market which should determine the best form of electricity generation. In 1989 70 per cent. of electricity generation was by coal. The situation has now completely changed and there is a greatly improved balance. It will be for the market itself to decide the proportions supplied by the various forms of generation.

The noble Lord, Lord Peston, referred to the fact that the White Paper mentioned that it appeared that there was no commercial argument for new nuclear energy and asked whether that meant that nuclear energy would come to an end. The noble Lord is not quite right in that respect. The National Economic Research Associates went into the matter in some detail and reported to the review. They considered, having taken all the information into account, that at present that was the case. However, if the private industry decides that the facts and figures have changed over time it is entirely possible for nuclear energy stations to be built.

The noble Lord asked whether Magnox decommissioning costs could be predicted fairly accurately. We now have a good deal of experience in relation to decommissioning costs. The costs are less than originally envisaged. Therefore, the cost of decommissioning nuclear generators as a whole is less than expected. Of course, it is impossible to give a simple answer which will cover every conceivable circumstance, but we can get a fairly broad idea now that we know that decommissioning is less expensive than it was expected to be.

It is perfectly true that when the companies are in the private sector they will have to accept liability for decommissioning. That will have to be taken into account when bids are made. How that decommissioning is carried out, whether through a sinking fund or some other method, is a matter for the companies.

The noble Lord was a little scathing about the 100 extra jobs in Scotland although he just about welcomed them. The moving of the headquarters, and the other repair mechanisms, to Scotland is a considerable advantage to Scotland.

The noble Lord asked, as indeed did the noble Lord, Lord Ezra, whether the holding company was a good idea. He asked whether the purpose was to enable Scottish Nuclear to remain basically for Scotland. That is, in fact, one of the main purposes. By having a holding company, one would have Nuclear Electric and Nuclear Scotland operating under a holding company. The purpose of having the special shares is to enable the Secretary of State, should he feel so inclined, to ensure that that remains the case. The White Paper discusses the benefits of the holding company, as the noble Lord will find when he reads it. Such a holding company is compatible with a regulatory regime and gives the least description to the existing companies.

The noble Lord also referred to the end of the fossil fuel levy. He stated that it was nothing to do with the White Paper. He may be strictly correct on that, but the matter is of considerable concern and interest. We thought it appropriate to put it in the White Paper. The only element

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of the levy which will remain—the noble Lord, Lord Ezra, referred to it—is the 1.0 per cent. to 1.5 per cent. levy raised for the renewals element.

The noble Lord asked whether the Magnox element of the levy will remain. It will not remain because the levy has obtained sufficient money to cover the decommissioning of the Magnox reactors.

The noble Lord, Lord Ezra, asked why we should be more successful privatising now than in 1989. The answer is that in 1989 there was considerable concern expressed about decommissioning, and the effect of nuclear energy on the environment. A lot more is now known about decommissioning. That has been undertaken. Therefore, not only the Government but the industry also know more about it.

The noble Lord referred to the holding company. I answered that point. He also referred to the levy. I believe that I answered that point. He referred, too, as did the noble Lord, Lord Peston, to safety. I can give both noble Lords the assurance that safety is paramount. The simple answer is that the regulations control whether or not a system is safe, not the methods of generation. Whether the generation is in the public or private domain, it is the regulations which ensure the safety. It is our intention to ensure that that safety will continue to be of the highest order.

4.33 p.m.

Lord Boyd-Carpenter: My Lords, can my noble friend now answer the question which was very properly put by the noble Lord, Lord Peston, as to whether this matter will be debated by your Lordships' House when the White Paper is available? I hope that my noble friend will not reply that that will be a matter for the usual channels because it is certainly my experience that the usual channels generally become gummed up when there is any question of your Lordships' House discussing really important matters.

Earl Ferrers: My Lords, if I may say so, that is precisely the reason that it is a matter for the usual channels.

Lord Marsh: My Lords, perhaps I, too, may support the view expressed that the Statement is unusual in length and complexity, in the mixture of issues raised by it, and the importance of the matter generally. While one would not lay the responsibility for running the business of the House on the noble Earl, I should be grateful to think that he was at least sympathetic to the idea that we could have a serious, sensible debate on the White Paper at some time.

Perhaps I may raise two other points. There are a number of issues, but surely a major issue is the existence now of a massive international market in nuclear distribution in this area which is already in excess of £5 billion a year and growing quite rapidly. The British nuclear industry is superbly placed to exploit that market if the constraints of public ownership are taken away.

Finally, I should be grateful if the noble Earl will say whether these golden shares, special shares, are purely to ensure that the offices and the activities are located in

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Scotland, or are there other factors? I am highly suspicious of privatisations where governments retain reserve powers.

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