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Lord Peston: My Lords, I must thank the Minister for introducing the Bill. The Bill is curious in one way in that it is relatively short in terms of the amount of paper it occupies. But, in my judgment, it is intrinsically a very long Bill which raises an enormous number of questions most of which are not answered in the legislation. Indeed, there is so little said in the Bill about what will actually happen that we shall obviously have to have a long and detailed Committee stage merely to elicit from the Government what they actually have in mind and what they propose to do.

A further complication is that when the Bill was first introduced in another place the nuclear power White Paper had not appeared and the Government had not made an announcement on privatisation of nuclear power generation. When we are considering the Bill in detail it seems to me that we will also have to look at it in that context. Perhaps I may say, en passant, that I was waxing rather strongly about the need for your Lordships to debate the nuclear power White Paper at some time, but I have not seen anything yet on our forward-looking document as regards when we are likely to do so. However, I argued at the time—and I believe noble Lords on all sides of the House agreed —that we ought to do so. Indeed, that is still my view.

I should also add that one reason why we need to scrutinise the Bill is what emerged in the Statement on nuclear power generation privatisation. I fully agree that I ought to have appreciated the fact—although, as I said at the time, I did not—that the Government feel able to say that they have the powers to privatise nuclear power generation without returning to Parliament. In particular, so far as I can see, even though the other place has procedures whereby a way can be found to at least debate the matter, we have no procedure whatever which would enable us to look at nuclear power privatisation. That is because the Government say that they do not need any further legislative power.

The reason that I emphasise that fact - apart from regretting that that will happen—is that, unless I misunderstand the legislation, the Bill is in exactly the same form. Assuming that the Government are able to pass the Bill into law, when the time comes to make those transfers to the private sector the Government will simply do it. They will say, "Well, we have passed the Atomic Energy Authority Bill and that gives us the power to make such transfers". Therefore, there will be no need to come to your Lordships' House. The Government may come to

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us with the announcement that they have done so, but they will not require any powers in that respect. In other words, we shall not be able to do anything about it if, for example, the Government were to split up AEA Technology much against our wishes. Indeed, we could do nothing about it. That is another reason why we will have to spend a good deal of time on the Bill as it is. If I am right—and perhaps the noble Earl will confirm this in his response—this will be our only opportunity to look at such matters.

The Minister said that he hoped he had convinced us. I wrote down several of his expressions for my future use. I believe he said that the Bill was the next logical step. The noble Earl also used the expression, "the best and only way forward". I am not sure what else he quoted from the cliché book of the Department of Trade and Industry. I should tell the noble Earl that he did not convince me in any way about the need for such a "next logical step". Indeed, we have the usual paradox in that what AEA Technology demonstrates is how well such a body can do in the public sector. It can do very well and it can meet the market test. It is now operating on a trading fund basis and doing so successfully.

When a firm in the public sector is doing badly the Government say that it must be privatised but when a company is doing well they also say that it must be privatised. In other words, there is no logical basis to what the Government have to say. Essentially, AEA Technology is an affront to what we might call the "dying embers" of the Government's free market policies, most of which have now gone. It is an affront to what is left of their political philosophy and they feel that this is their last chance to do some damage to an extremely good public sector institution.

In that connection I have two further points to make. First, are the Government able to tell us at present how profitable the business is on a proper profit and loss account basis? Can we be told that information, or is it commercially confidential? Secondly, BZW (Barclays De Zoete Wedd) produced a report on the matter. I am not quite sure how to pronounce the name as I tend not to mix in those rather high-falutin merchant banking circles. Perhaps I should, as always, declare a complete lack of interest. None of them seems to feel that it is worth while to employ me as a non-executive director—yet. There is a copy of the report in the Library. As that places it in the public domain, I am wondering whether other noble Lords who are interested in the extremely bulky document could have their own copies because it is rather easier to work with such documents when one actually has one's own copy. Incidentally, I should be quite interested to know how much BZW was paid for the report. So far, I have only managed to read the summary which claims to demonstrate the value of privatisation. I cannot find any serious analysis in that respect.

I turn now to AEA Technology. For my own interest, I was delighted to hear the Minister say that the Bill is not called the AEA Technology Bill. I have looked through the legislation—and I am not terribly good at such things—and I could not find any mention of AEA Technology in it. I believe that the noble Earl can confirm that that is not an error on my part. Indeed, it is not mentioned. Essentially the Bill gives the Government the powers not to privatise a whole section of the Atomic

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Energy Authority, but powers to privatise what is left over. What is left over turns out to be AEA Technology. It is a rather peculiar way of undertaking a privatisation. It leads to questions some of which the noble Earl answered.

The main question, apart from, "What it is?"—and since the Bill does not specify what AEA Technology is we have some difficulty from the outset in knowing precisely what we are talking about—is: "What are its assets?" What is it that you are selling? I entirely agree with the Minister who, I believe, said that really the assets are the people who are employed by AEA Technology, together with their skills and their know-how. To use a rather ghastly technical term, what we have here is an example of supra-additivity; namely, that the whole is worth a good deal more than the sum of the individual parts.

What matters is whether all these people as a whole and their know-how are to be transferred. I believe that the Minister in the other place originally took the view—but then he seemed to change his mind—that, if this business is to be sold at all, it should be sold as a whole. However, there is now no commitment to selling the business as a whole.

My interest, wearing a standard economist's hat, is in what there is to sell anyway, in so far as all the people who belong to AEA Technology are footloose. If one buys the company, that does not mean one owns the employees. They could work for someone else and even set up their own company as far as I can see. I am interested to know what, finally, there is to be bought. Do the Government have any indication of what the business is worth net—I mean what it is worth net of all its liabilities? That would be worth knowing.

That point relates to two other questions. Does AEA Technology have a series of long-range contracts which would be transferred with the privatisation? I assume that as we are talking about the transfer of property, included in what would be transferred would be intellectual property. In so far as the Atomic Energy Authority—I am not sure it is that body—or the Government own the relevant intellectual property, would that be included in the sale? I give the Minister notice of these questions but we shall deal with them in much greater detail when your Lordships sit as a Committee. One is interested in the liabilities, the nature of the possible write-offs and all that sort of thing.

I have referred to who would buy the business and what there is to be bought. However, are there any restraints on who could buy the business? I cannot see anything in the Bill that limits who the possible buyers could be. For example, can the business be foreign owned? Could it be bought by anyone abroad who can come up with the best bid? I can see nothing in the Bill which prevents anyone from buying the business. I should like to know the answer to that question. It is related to the matter which I raised at the beginning of my speech, in that presumably Parliament itself would have no say in that matter. If the business were to be sold to people about whom we might have doubts, we would have no locus to look at that. At no point does the expression "fit and proper person" or anything of that kind appear in the Bill. That is another matter that we need to consider.

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I have already referred to the fact that the Bill is an enabling Bill. I believe that the only way that I personally, or your Lordships, can obtain further information on what the Government will be enabled to do would be by means of laying down in Committee all sorts of further points about the transfers because we shall not get any other entrée into what the Government propose to do when the details of privatisation are revealed. The Minister said that we have done this before. The one case where we have done this before recently is that of nuclear power privatisation, and I have expressed my disquiet about that. However, even if we have done this before, it does not mean that it is right and that provisions which have a parliamentary interest should proceed without your Lordships having any involvement whatever.

I have referred to the overseas aspect of this matter. There are two other facets of that which I must mention. I believe the Minister said that the responsibility for decommissioning, waste management and all that will still remain with the Atomic Energy Authority. I may have misunderstood what he said and I hope that he can clarify that. I believe we can all agree that there should be no blurring of who is responsible for decommissioning, waste management and nuclear plant safety. When we were listening to the Statement on the White Paper the Government said that they did not resile in any way whatever from their concern about safety. I hope that that assurance will be repeated.

That leads me to the following question. Will the Atomic Energy Authority, if and when it is privatised, be able to use its skills to assist in the construction and operation of nuclear power stations and all aspects of them in any foreign countries whatever? Is there any limit on what it might be able to do? Could it be involved with foreign countries and nuclear power stations in those countries when those countries could potentially be unfriendly towards us? Is there any connection in the Government's mind between the Atomic Energy Authority's ability to use its skills for that purpose and the eventual proliferation of nuclear weapons capabilities in those countries? Is there any restraint on the people who work for the Atomic Energy Authority simply resigning and using their skills in those countries? Those are all matters which I believe we need to address, particularly in the context of privatisation.

There are two or three other points that I wish to raise at this stage. There are many others, but I believe that your Lordships, especially as we are discussing this matter on a Friday, would prefer me to save those other points until the Committee stage. However, there are two or three other points that I must mention now.

The Minister referred to the pensions question. He used the word "equivalent" and the words "taken as a whole". I for one do not regard the word "equivalent" as having the same meaning as "the same". I will stress in Committee that people who are currently employed in the public sector should have the right to have the same pension, if that is what they want. I do not like the expression "taken as a whole", which always strikes me as being a way of not giving someone the same provision. It is a way of making provision that is not really the same.

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I and my noble friends shall certainly return to this matter of pensions. That of course is not a million miles from the question of terms and conditions of employment.

One other overseas matter that I will have to ask the Minister about—however, we may be able to leave this to a later occasion—is whether there is a European Union angle to any of this. Are there directives, actual or potential, which will get in the way of what needs to happen? I cannot think of any but I am not an expert on that matter. The Minister's officials are experts on that matter. One would at least like to know whether there is a European Union angle to all of this.

Another point that I wish to mention is something that I find rather odd. I hope that the Minister will advise me on this. It is a matter that was dealt with briefly in the other place. Clause 11 of the Bill refers to membership of the Atomic Energy Authority. If I read it correctly—I am pretty sure that I do—the Bill proposes to reduce the minimum number of members of the authority. The minimum was seven but it will now be four. The original Atomic Energy Authority Act specified the sorts of people, and their expertise, who should be part of the Atomic Energy Authority. The Government wish to amend that Act to remove the requirement to seek people with particular forms of expertise. I believe in the other place the word used with regard to that proposal was "daft". I would never use such a word in the hallowed precincts of your Lordships' House, but I raise an eyebrow as to why that particular change to the Atomic Energy Authority Act needs to be made.

In conclusion, the Minister can see how helpful I am trying to be on this matter and how interested I am in the subject. I look forward to our rather brief debate today. I believe that we all look forward to the detailed scrutiny that we can give this Bill when your Lordships sit in Committee when we can elucidate a great many more of these topics.

11.39 a.m.

Lord Ezra: My Lords, the noble Earl in introducing this Second Reading debate gave us the background information to the Atomic Energy Authority. He reminded us that it had been started in 1954 to cover all aspects of nuclear R&D and that progressively over the years its functions had been modified leading up to the major reorganisation in 1994 under the current chairman, Sir Anthony Cleaver, when it was separated into three divisions.

There is the government division, which is concerned with the management of the Government's nuclear liabilities and the decommissioning of redundant plant. It emerged from the debate in the other place that those liabilities amount to something of the order of £8 billion, and are therefore very substantial. The service division puts together all the service activities for the purposes of running the organisation. That service division has now been transferred to a company called Procord, which will provide the necessary services and therefore does not figure in the Bill. Finally, there is the commercial division known as AEA Technology, which is what we are concerned with although, for the reasons that the noble Earl indicated, that is not mentioned by name in the Bill.

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Therefore one has to look at the Bill on the basis of a process of deduction to find out exactly what we are talking about. We are, in fact, talking about AEA Technology.

AEA Technology, in its present form as a separate division of the Atomic Energy Authority, has become one of the leading international engineering and scientific consultancies. Perhaps I may indicate to the noble Lord, Lord Peston, the results of its operations. My researches suggest that its turnover is currently £250 million. That has emerged in some of the documents that I have seen. It expects to earn a pre-tax profit of £10 million. Anyone who is familiar with consultancy will know that that is a good result. To earn a pre-tax profit of £10 million on that turnover is excellent. The chief executive of AEA Technology has indicated that he believes that the company could achieve a turnover of £400 million in three years' time, presumably with a corresponding increase in pre-tax profits. Therefore, from the public's point of view—and I emphasise that this is a company which is owned by the public, not by the Government—it is a very good investment.

That raises one or two questions. First, should the organisation be privatised now or would it be better to do so later?


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