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Removal Of Restrictions On Capacity To Acquire Certain Securities

Volume 404: debated on Wednesday 30 April 2003

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Lords amendment: No. 1.

4.48 pm

I beg to move, That this House agrees with the Lords in the said amendment.

First, I should explain that my hon. Friend the Minister for Energy and Construction is in the western isles today, and that the privilege of taking this part of our consideration of the Bill through the House therefore falls to me.

Lords amendment No. 1 clarifies the Government's intentions for the use of clause 2(1). It does not reduce the Government's flexibility to react to what happens to British Energy, but it does help to spell out our position with more clarity than might have been the case before. I believe that the House will welcome the change.

I remind the House that the main function of clause 2(1) is to repeal sections 72 and 74 of the Electricity Act 1989. Our intention in repealing those sections is to remove an impediment that exists at present, and to allow the Government to buy shares in British Energy in the event that the company goes into administration. That step would be taken only in that eventuality, and even then only if no private-sector buyer was to come forward. Throughout the Bill's progress through the House, we have stressed that although the company's solvent restructuring proposals appear to be progressing satisfactorily—and we welcome that—we must be prepared for every eventuality.

In the course of the debates on the Bill, in this Chamber and in the other place, fears were expressed that clause 2 would create new powers for the Government. Concern was expressed in particular that the reference in clause 2 to acquiring "securities of any company" might give the Government a new right of compulsory purchase.

The clause was certainly not intended to do that. Lines 16 to 18 on page 2 of the Bill are there to clarify that the powers that the Government were able to exercise before the introduction of the 1989 Act will be properly restored once sections 72 and 74 are repealed.

The Government consider that the amendment is not strictly necessary, but we have accepted that it helps to explain that this part of clause 2 is for clarification, and that allays entirely concerns that have been raised. I therefore hope that the House will agree to Lords amendment No. 1.

I am sorry that the Minister for Energy and Construction is not in his place. He seems to be making a habit of it: when we debated the Sustainable Energy Bill, one of his ministerial colleagues stood in for him. On that occasion the Minister was not campaigning, but properly carrying out negotiations in the British interest on a gas deal with Norway. Indeed, given the critical position of the United Kingdom's future supplies of natural gas, after the complete inadequacy of the Government's White Paper, the hon. Gentleman would have been better employed in continuing to work for the future security of our energy supply than in campaigning in the western isles. However, such are his priorities and I am sorry that he is not in the Chamber.

The amendment is described as a drafting amendment. It is remarkable that my noble Friend, Lord Jenkin of Roding, managed to convince the Government that they should include the expression
"For the avoidance of doubt".
It must be unique in legislation for a Government to accept and propose for the endorsement of the House an expression that is, as the Minister for E-Commerce and Competitiveness has told us, formally meaningless.

I congratulate my noble Friend on convincing the Government that those words should be included. He was making a point about the doubt that runs through the whole Bill. Ultimately, none of the reassurances that have been given by Ministers in this place and by Lord Sainsbury in the other place have the weight of statute law. The Government were presented with a series of opportunities that would have enabled them to avoid doubt, yet all that we have been able to secure from them is this amendment.

The Bill comprises a raft of issues, not least the potential for unlimited public expenditure to support the company. The Government had the opportunity to ensure that such expenditure was limited. We were even told by Lord Sainsbury that the Government had no desire to go beyond the spending limits already set out in existing legislation. However, even though—for the avoidance of doubt—the Opposition proposed an amendment that would have quadrupled those limits, the Government would not accept it. We are left with merely a humorous aside.

The Bill is riddled with doubt as to the Government's intentions and their request for flexibility in dealing with British Energy. All the proper limits that we requested have been reduced to the expression
"For the avoidance of doubt".
That the Government believe those words will bring clarity merely reinforces the concerns expressed about the Bill in this place in our previous debates and by my noble Friend Lord Jenkin, a former Minister for Energy, when he persuaded the Government to accept the amendment.

This is not a good Bill: the incorporation of the amendment—that little phrase—is to be welcomed as it makes the point.

Lords amendment agreed to.

Lords amendment: No. 2.

I beg to move, That this House agrees with the Lords in the said amendment.

With this it will be convenient to consider Lords amendment No. 3.

My noble Friend, Lord Sainsbury introduced these amendments on Report in the other place. I hope that the hon. Member for Reigate (Mr. Blunt) can be a little less churlish in his welcome for them than he was for amendment No. 1. The effect is to change the scrutiny arrangements for the delegated power in clause 2 from the negative to the affirmative procedure—a change that I am confident will not be opposed by those on either side of the House.

Let me remind the House of the rationale behind the decision to take a delegated power to repeal part 2 of the Electricity Act 1989. The outright repeal of sections 72 and 74 has been discussed already, but it will give the Government the option to repeal any further sections in part 2 of the 1989 Act—a part that is now largely redundant. The reason for taking the delegated power is simply that we wanted more time to consider the effect of repealing the provisions in part 2 before doing so and to ensure that there is no adverse effect.

The Bill was originally drafted with the negative procedure attached to that power, as we considered that sufficient given that the power is relatively minor. In Committee, the Opposition tabled an amendment—I think that the hon. Member for Reigate did so—but there was not enough time to debate it. Concerns were expressed in the other place, most notably by the Select Committee on Delegated Powers and Regulatory Reform, which was concerned that the Government could, in theory, repeal live and significant provisions in the 1989 Act.

The Government recognised the concern expressed in both Houses and agreed to change to the affirmative procedure. My noble Friend therefore moved Lords amendments Nos. 2 and 3 to give effect to that change. Lords amendment No. 2 makes it clear that the order would be made by statutory instrument. Lords amendment No. 3 sets out the procedure to approve the order. The change will not adversely affect the original aims of the Bill, and I ask the House to agree to these Lords amendments.

Of course I would not want to be seen to be remotely churlish in wholeheartedly welcoming these Lords amendments. It is, frankly, an absolute scandal that we should have to consider them anyway; we should not have had to amend the Bill so that the negative procedure in either House is not used when the Government seek to take powers to repeal great chunks of legislation.

When the Government originally introduced the Bill, their case was that the sections of the Electricity Act 1989 that might be repealed were all superseded by the fact that privatisation had taken place, that things had moved on and that that legislation was redundant. What are all the officials doing in the Department of Trade and Industry? Why were they not preparing properly for the Bill, so that they could tell us during its various stages of consideration, exactly which parts of the 1989 Act were redundant and should be repealed properly by the Bill? We attempted to give the Government the opportunity to do so, but, again, they wanted everything to be taken on trust.

The Government initially tried to ignore the recommendations on procedure made by the Select Committee to which the Minister referred. Of course I am pleased that the Government have, in effect, accepted the amendments proposed in another place by my noble Friend Baroness Miller, by reworking them in the Government's own words, but it should never have come to this.

It says something about the Government's mindset and the assumptions that underlie their position that they should even think of taking powers by the negative procedure in either House of Parliament to repeal chunks of legislation. I say that happily with the Leader of the House in his place, and I hope that, under his tenure of leadership, the Executive will treat this institution with proper respect and that we will not have such an occasion again when their Lordships' House has to introduce amendments to show proper respect for Parliament.

The House should not be taken for granted. The effect of these Lords amendments is welcome because that will not happen, but those provisions should never have been included in the Bill in the first place. Of course, as these Lords amendments were Conservative proposals, as the Minister has pointed out, we wholeheartedly welcome them, and we will certainly support them. I commend them to the House, but it should not have come to this, and I hope that it will not happen again.

5 pm

I endorse the comments of the hon. Member for Reigate (Mr. Blunt). This is not, of course, another forum to debate the Bill as a whole, with which we are profoundly happy, but we have been trying, as have the Conservatives, both here and in the other place, to increase the precision of the Bill and to improve parliamentary scrutiny. The proposal is a small gesture in that direction, which we very much welcome.

I want to pose a few issues of substance relating to the Bill, to inquire about the circumstances in which these affirmative procedures might be used. What changes in context might lead to fresh action having to be taken in relation to the industry? First, under the existing arrangements, the Government have made a loan of £650 million to the industry, and it is assumed that that will be repaid out of the surplus over operating costs following the restructuring that has now been agreed. Can the Minister indicate the progress of that repayment, and when the Government expect it to be completed, under the assumptions that I presume they are making in relation to the prices operating in the market? Clearly, if the assumptions are not right, the Government may have to return with fresh legislative changes under the procedures that we are discussing. A progress report would indicate the soundness of the assumptions under which the legislation is operating.

Secondly, one of the other key uncertainties hanging around the Bill, which may result at some point in us having to revisit it through this procedure or some other, relates to the approval that must be given by the European Commission. I understand that that is a prolonged process. There are objections from the other producers, as the Minister knows. Can he indicate when the procedure is due to be completed, as I understand that it could take as long as 18 months?

Thirdly, another of the key uncertainties underlying the Bill, which affects the whole operating economics of the industry and, therefore, the circumstances under which we may need to revisit it with changes, concerns the excess capacity that operates in the industry. There has been a lot of uncertainty—

Order. The hon. Gentleman is now abusing the confines of the debate. A very thin thread connects those matters to the Lords amendment that we are discussing. He would be advised not to develop those points further.

My questions were posed in good faith and in the belief that they were fully within the remit of the debate.

Order. I was never suggesting that the hon. Gentleman was acting in bad faith. I am merely trying to keep the House in order.

Of course, I fully accept that, Mr. Deputy Speaker. I reiterate simply that we welcome the procedural changes, and I do not think that there will be any further question of a Division on the Bill. I fully accept the spirit of the Conservative spokesman's comments, however.

The hon. Gentleman has indicated that he would like a little further information, and perhaps we can deal with the matter through an exchange of correspondence. Good progress is being made, however, particularly on the loan. As he will know, British Energy's Canadian assets were successfully disposed of recently, and, of course, part of the loan was to enable that operation to continue successfully. He need not have any concerns on any of those matters, therefore, although the amendments are not connected with the points that he raised.

The Minister referred in his opening remarks to the fact that these amendments were tabled by Conservative Members, but that we simply did not have time to consider them in Committee because of the time allocated for the Bill. Does he think that that is a satisfactory state of affairs? What should be done to ensure that that does not happen again and that we do not have to rely on another place to put right what we have simply failed to achieve?

Anyone considering the scrutiny that the Bill has received in its parliamentary process in this House and the other place will reach the conclusion that it has been very thoroughly scrutinised and that we have been able to make significant changes that have improved matters. The hon. Gentleman and his hon. Friends need to examine how they manage their contributions in Committee to ensure that there is adequate time for scrutiny of important issues. Large amounts of time were applied to matters of little importance and, as a result, significant issues were left. I commend the amendment to the House.

Lords amendment agreed to.

Lords amendment No. 3 agreed to.