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Lord Fraser of Carmyllie: Perhaps I may respond to two of the points. It may be that there are some within Warren Spring, previously employed before the merger took place, who did not think that that was the best way to proceed. It is certainly our view that, following on that merger last year, a first-class organisation is being brought together which is well placed now within the privatised AEA, in parts or as a whole, to take advantage of the opportunities that lie there. So it is not simply an expression of hope. I believe it is an objective assessment of the benefits of the merger.

I make no criticism of the noble Lord's amendments. I suspect that he drafts very much better than, in a modest fashion, he indicated. My clear understanding of the position—and it may not have been understood by the employees—is that there will be a number who are working for Government Division at the present time, and it would not be desirable to put them in a position of uncertainty as to where their future lay once the particular projects on which they were working came to an end. I put it in that way so that the noble Lord and those who made representations to him may reflect on what I believe may have been an unintended consequence.

Lord Clinton-Davis: I thank the noble and learned Lord for that explanation. I shall certainly reflect further on the matter, as I am sure will the employees. Having heard what the Minister said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 4 to 8 not moved.]

Lord Haskel moved Amendment No. 9:

Page 2, line 4, at end insert:
("( ) No direction to make a transfer scheme shall be made before a period of one year has elapsed after the passing of this Act").

The noble Lord said: Since Second Reading we have had the Nuclear Review and the suggestion that Nuclear Electric will be sold. It would seem to be sensible to co-ordinate the sale of AEA Technology with the nuclear power sale that is proposed in this White Paper. Not to do so would almost certainly fail to get the best price for AEA Technology because more than 50 per cent. of the work of AEA Technology is nuclear. Equally, uncertainty over the future availability of AEA Technology's services would reduce the market value of the nuclear power business when it comes to be sold. If the Government want to get the maximum value from both those sales, they should co-ordinate them. This amendment encourages them to do so. I beg to move.

Lord Fraser of Carmyllie: As I indicated previously, the Government's aim in this legislation is to keep sale options open. One element of that strategy involves preserving the possibility of early or late vesting. Once the transfer scheme powers have been used to vest property, rights and liabilities of the authority in a transferee, then in general the property concerned cannot be re-vested by the scheme.

17 Jul 1995 : Column 51

That argues for vesting AEA Technology in the form in which it is most likely to be sold. It is therefore possible that vesting by scheme would not take place for more than 12 months after the Bill has been passed. Equally, it is possible that, subject to the performance of AEA Technology, vesting in a shorter timescale would become desirable. That could be the case, for example, if AEA Technology were to perform in a way which confirmed that unitary sale was the best option. I understand the argument that the noble Lord advanced but I would not wish to limit the scope of the powers by introducing an arbitrary time limit on when they might apply.

I might also emphasise, although I am sure that the noble Lord is well aware of it, that what is being proposed for privatisation within the technology is not an area of expertise that is in any sense exclusively related to nuclear expertise. The expertise that they have now acquired across a broader front is equally valuable and the directness of the relationship between that and nuclear power is possibly not as tight as he suggested.

Lord Peston: Perhaps I may intervene at this point. The amendment had a slight ulterior motive, which the Minister chose to ignore. We were trying to winkle out whether the noble Lord had any news for us on nuclear power privatisation. He will have noticed the remarks made by my noble friend but he did not say a word on that subject. May I assume that he is not yet ready to tell us anything about the timetable of that particular divestment?

Lord Fraser of Carmyllie: The noble Lord makes a correct assumption. I wanted to underline also that I did not accept that in this context there was any particular parallel to be drawn. I thought that there were other reasons why he wished to delay for 12 months. We could possibly explore that point at another date.

Lord Haskel: It seems that once again the Government are using the phrase "keep our sales options open" as a means of saying that they are unprepared for what will happen. Indeed, it may well be that it will be 12 months before this privatisation goes ahead, by which time we shall know more about the position of Nuclear Electric. We shall have to come back to this matter on Report. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

Schedule 1 [Transfer schemes: supplementary provisions]:

[Amendments Nos. 10 and 11 not moved.]

5.45 p.m.

Lord Peston moved Amendment No. 12:

Page 9, line 4, at end insert:
("provided that no property which may contain any fissile or other controlled material shall be transferred unless the Secretary of State is satisfied that control of that material meets any requirement of the Treaty on the Non-Proliferation of Nuclear Weapons (Cmnd 4474).").

17 Jul 1995 : Column 52

The noble Lord said: I have chosen this amendment as the peg on which to hang a number of concerns about nuclear proliferation, security, safety in an international sense and other international matters.

At Second Reading I asked various questions about whether the AEAT, once it was privatised, would be able to assist in the construction of nuclear power stations abroad. I hasten to add that I am not opposed to nuclear power—quite the contrary. I simply hold a consistent position in that I wish electricity to be generated in the "least cost" way. If nuclear power turns out to be "least cost", then that is fine and if not, it is not fine. I do not see the fundamental issue on nuclear power that often my honourable friends and noble friends have seen.

So my remarks are not antipathetic to nuclear power. My concerns are about nuclear technology one way or another falling into the hands of nations which are actually or potentially unfriendly towards us. I am concerned about the acquisition of fissile materials which could be used for other purposes by nations which are or are potentially unfriendly towards us. I believe that, over the years, our Government have kept up a very good record in that respect. I do not in any sense intend to criticise the present Government or their predecessors in this area.

All that has happened so far has been within the public sector domain, if I may use that expression. Everything changes somewhat in the context of privatisation.

The related matter—the expression that we all emphasised —is that the business we are talking about is essentially based on human capital with the expertise of individuals. Individuals are mobile. I assume that at the present time employees who are now public servants could go and work abroad, acting as advisers to governments who are unfriendly towards us. I reflect on whether the Government have considered that matter sufficiently.

The point about employees was raised in another place. Once that part of the industry is privatised, I am not entirely certain how far the kind of protection connected with the Official Secrets Act and so on will continue to help. After all, the employees of AEAT will be in the private sector and no longer in the public sector. Since they undoubtedly have knowledge and will acquire new knowledge, possibly of the kind which ought to lie within the ambit of the Official Secrets Act, it is not obvious to me how that protection can continue. What replaces the Official Secrets Act is commercial confidentiality, which is not the same thing at all. That is the area in which we now operate.

There is another related matter and I cannot now remember whether I asked the question at Second Reading. Do the Government have any view on whether the purchaser of AEAT could be wholly or largely foreign owned? More to the point —we shall come later to further transfer of these assets —will any controls remain in subsequent years over foreign acquisition of the company? Again, I pride myself on being an internationalist and my point reflects no kind of

17 Jul 1995 : Column 53

antipathy to foreigners. It has to do with the sensitivity of the nuclear area and in particular access to that kind of expertise and those kinds of materials.

My difficulty in pursuing this issue, as noble Lords will be aware, is that there are so many different Acts of Parliament which apply in this area. The original atomic energy Acts apply. Certainly the 1965 Act applies among other measures. It has certainly been rather difficult for me to plough my way through all the different measures to answer my own question, so to speak. But that is the whole point of having the Government and the Opposition; namely, on matters of this kind I ask the difficult questions and the Minister has to work through the problems and give me at least some semblance of an answer.

This is not a matter that we can simply let go. Serious questions arise in relation to the future stability of the world. We know, if only from hearsay, that small nations are still trying to acquire nuclear expertise and the relevant raw materials. What is of considerable interest is that, on the whole, we have prevented that from happening. The extent of nuclear proliferation is a good deal less than I would have predicted, given my worst fears.

The Bill represents a serious change. I cannot believe that neither the Minister nor his colleagues in government have thought about this issue. The reason for my raising it is to give him one additional chance to place on record any thinking that they have had. I read the remarks made by his honourable friend in another place and my interpretation was that we may be expecting a fuller statement on the whole area in due course. It may be that today the Minister wishes to make that fuller statement.

To conclude, I repeat that I do not wish my remarks to be interpreted in any way as anti-nuclear and certainly in no way as undermining the desirability of AEAT, if it is to be privatised, being commercially viable. But in that regard we must be ultra cautious so that we do not suddenly discover, whoever is in government, that nuclear expertise has developed elsewhere and that we were somehow involved in it. That would not be a satisfactory state of affairs. I beg to move.

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