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Lord Sainsbury of Turville: I shall continue with my clarification. On Schedule 12, there is a debate to be had about how the limits should be changed. On Brussels, the plan was submitted on 7th March and will take a considerable time. I raise that only to say that, as with all situations involving state aid, that will obviously involve a limit on what the Government can do in terms of subsidising any future company. Noble Lords were rightly concerned that we should not be in a situation in which we were providing support on an ongoing basis that would interfere with competition between BE and other generators. That is the correct way to look at that.

On the issues involving what the money will be used for, I tried to set out clearly the particular categories of expenditure that the provisions would allow us to cover. In that context, it is difficult to specify a limit because there are two different routes that one could take. One route involves the situation in which the company does not go into administration and the other involves the situation in which it does. In either case, there would be a restriction, which would come from state aid regulations, about any ongoing support, to which other generators could object.

Lord Jenkin of Roding: I mentioned earlier that I had been at the Treasury and was surprised by the way in which the Treasury appeared to have dealt with this matter. Rolls-Royce was one of the events with which I had to deal as Chief Secretary to the Treasury, which noble Lords will remember went bust in, I believe, 1972—I have not looked up the date. There was clearly a huge national interest in making sure that the continued supply, maintenance and upkeep of the engines—not least for defence—should continue. That

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was all done under administration. There was a necessity to handle that; the same applies in this regard.

It is ironic—historians will find this an interesting observation—that a Conservative government, faced with a necessity to protect the national interest by dealing with a major manufacturer, were not afraid to allow Rolls-Royce to go into administration, and a large part of it became a public corporation. It later fell to me to appoint a chairman with a specific remit to prepare it for privatisation. The noble Lord, Lord Tombs, will remember that. It was nationalised and subsequently privatised.

We now have a new Labour Government who are determined that the company should remain in the private sector, notwithstanding the fact that substantial sums of government help are necessary. They are doing their utmost—I give them some credit for this—to prevent the company from going into administration. As the noble Lord told us at Second Reading, there was no prospect of anyone else wanting to buy it. The Government, as purchaser of last resort, would have to buy and run it; that is to say, it would be nationalised. I am not sure whether there is a very close parallel between the way in which the government dealt with Rolls-Royce in the 1970s and the way in which the Government are dealing with British Energy in the 21st century. In either case, the Treasury needs some control and Parliament needs some control, as was required in paragraph 4 of Schedule 12 to the 1989 Act. So far we have not got that.

Under the rules about which we were informed at the beginning of our sitting, we cannot vote on the amendment at this stage; these would probably not be the right amendments to vote on. We shall return to the matter. I do not believe that the Bill should leave the House without adding some clear limitation on what can be spent without coming back to Parliament for a further permission. Perhaps that reveals the way ahead in this regard. I find all of this highly unsatisfactory.

Lord Ezra: In the light of the Minister's comments, we may need to reword the amendment, bearing in mind that we still feel strongly that there should be a better definition about what the money would be used for and some limit imposed beyond which the Government would have to come back to the House and seek further powers. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Jenkin of Roding moved Amendment No. 2:


    Page 1, line 7, leave out paragraphs (b) and (c).

The noble Lord said: In moving Amendment No. 2, I shall speak also to Amendments Nos. 5 and 6, which are wholly consequential on the lead amendment.

The amendments raise the issue of whether the Government are right to take the power to acquire the assets or security of British Energy—that is, to buy

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the company or a substantial share of it. The Government say that the power is necessary in case the restructuring fails and the company must go into administration, when the Government could buy the shares—but should they have both barrels loaded at the same time?

The Minister and the rest of the Government have firmly hitched their wagon to the restructuring option. That is their decision, although administration would have been preferable, as I said at Second Reading and others have said in another place. Mr Vincent Cable, the Liberal Democrat spokesman, made it clear in another place that he would have preferred administration. However, the Government must now pursue their option. Surely, retaining the power to buy assets or to buy the company in the Bill, without any further parliamentary step needed to authorise it, is to water down their commitment.

The Minister nodded vigorously when I questioned whether the Government needed that power, but it is absolutely open-ended. The Bill refers to,


    "the acquisition . . . of . . .


    (i) any securities of a British Energy company; or


    (ii) any part of the undertaking or assets of a British Energy company; or


    (c) the carrying on of any undertaking acquired".

The definition is very broad. In the case of Rolls-Royce, the government of whom I was a member did the only sensible thing to do in the circumstances. This Government have chosen the other option, of trying to keep the company in the private sector. Thereby they have endorsed the whole process of privatising the electricity industry; but I mention that only in passing. Should they have the power to do that automatically, if the restructuring fails? Should they not at least come back to Parliament, and should the power not be subject to statutory instrument, so that Parliament can vote again? Do the Government imagine that events will occur so suddenly that restructuring will fail and the administrator will be appointed one day, and that the next day they will have to step in and act? I do not believe that that would be the case.

As noble Lords and others have repeatedly said in debates on the Bill, an administrator would be perfectly capable of continuing to pay the staff, honouring the pensions and ensuring that the lights are not turned off. Using that continuity of operation as a reason to step in for restructuring has worn a bit thin. An administrator could carry on the business and, if the Government really wanted to, they could provide the administrator with funds to enable him or her to do that. It would not happen immediately, and there would be plenty of time for the Government to come back to Parliament for an order authorising the acquisition, in which case we could consider carefully whether the order was limited to what was necessary to achieve the immediate purpose. Simply to include it in the Bill as an open-ended power is going altogether too far, and I do not believe that the power should remain in the Bill as it is. I beg to move.

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4 p.m.

Lord Sainsbury of Turville: Members of the Committee will be aware that this Bill is part of the Government's response to the problems faced by British Energy. Its purpose is to ensure that the Government are properly prepared to deal with BE so that they can play their part in the company's restructuring plan, or have proper contingency plans in place in case that fails and the company goes into administration.

Paragraphs (b) and (c) of Clause 1(1) provide an important part of that contingency plan. They give the Government explicit parliamentary authority to incur expenditure on acquiring the British Energy operating companies or, alternatively, the business and assets directly in the event of administration. That is important, as it allows the Government to be fully prepared for administration should the situation arise.

The provisions within paragraphs (b) and (c) are simply a matter of prudent contingency planning. They certainly do not represent an in-built preference to renationalise the company, as some Members of the Committee seem to fear. If we had wanted to do so, we would have done so already, as did the Conservative government of which the noble Lord, Lord Jenkin, was a member with Rolls-Royce. The subsections simply give the Government parliamentary authority to spend taxpayers' money; they do not require the Government to spend that money or change the law to give the Government any kind of special power of compulsory purchase. As I said, we would acquire BE's nuclear business only as purchaser of last resort, in case the company failed and no private sector company stepped forward.

The amendments proposed by the noble Lord, Lord Jenkin, would remove the explicit parliamentary authority. Amendment No. 2 is the substantive amendment, with Amendments Nos. 5 and 6 being linked consequentially. These amendments would essentially prevent the Government from ensuring that the necessary contingency planning was in place in case the restructuring deal failed and the company went into administration. That would not be a responsible position to take. Surely, everyone will agree that, if British Energy goes into administration, the Government should be able to take the necessary action to ensure nuclear safety and security of supply.

If the company were to fail and we were not prepared, I can imagine what the noble Lord, Lord Jenkin, would say. He would tell us that it was scandalous and improvident that the Government, having had a period of warning of the situation, had taken no steps to take appropriate action. If the power were not in the Bill, we would have to come back and take up valuable parliamentary time in debating it. During the course of that time, which could be several months, we would be spending money on an administrator. That would hardly be prudent or sensible.


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