Mr. Djanogly: First, I should like to declare a non-registerable interest in British Energy shares.
My first point is technical and relates to the definition of British Energy in the context of the amendments. The Bill defines "British Energy company" as
"British Energy p.l.c. or a company which either is or immediately before the passing of this Act was a subsidiary of British Energy p.l.c. (within the meaning of the Companies Act 1985)".
The Companies Act 1985 uses a control definition of "subsidiary"-normally, if more than 50 per cent. of the company is owned-but a smaller percentage holding could apply if control of the subsidiary were owned through voting rights.
I should like to ask the Minister some questions. Are there any subsidiaries that are not 100 per cent. owned? If so, who owns those minority shareholdings? If there are such companies-for example, joint ventures and so on-will the Government give an assurance that clause 1 will not be used to acquire them? Of course, the fear is that those provisions could be used effectively to pay off third parties and to get around the order of payment that would apply under the normal insolvency rules. If the clause were used to subvert our insolvency rules, there could be great cause for concern and hon. Members would certainly want it to be debated.
Nationalising the company would be a disaster. Clearly, it has had problems. There have been management and strategy failures, and the Government have failed to understand the implications of their own legislation on the market. Ironically, the windfall tax has taken from this sector about the same amount as the taxpayer will need to pay towards British Energy's historic nuclear fuel liabilities.
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We then have to consider the climate change levy and the new electricity trading arrangements. We could discuss the Government's failure to give a clear lead on where the industry is going. Without the energy White Paper, we and the whole energy sector are forced to scramble around in the dark. That will continue until we know what is in that White Paper.
Of one thing I am sure: any attempt to manage this business from Whitehall would certainly not work. That would remove the sector even further from the disciplines of the marketplace, and would load further liabilities on to the taxpayer. The power of acquisition in this clause will send all the wrong messages. This company should go into administration, as any other company in a similar situation would do. The Government have admitted that, either way, they will be responsible for nuclear liabilities. Why, therefore, do they keep digging a hole-a hole that will appear in taxpayers' pockets? That hole will get bigger if the Government start buying up power stations.
The Government view having an administrator as a possibility but, worryingly, the Minister for Energy and Construction is already undermining the role of any such administrator. That role, of course, is to maximise returns for creditors. On Second Reading, the Minister said that the Government were
"not aware of any credible private sector interest in acquiring BE if it were to end up in administration."
He has repeated that view in a slightly different way this afternoon. In fact, he has gone even further, asking why the Opposition had not come up with a purchaser for the business. I felt that he had rather missed the point. If what the Minister said is coupled with the failure to publish the White Paper and to show potential buyers what will happen in the sector and what kind of marketplace will exist, what rational person would want to be a buyer? Could it be that the Government are, in effect, killing the market so that they can buy the assets back on the cheap if restructuring fails?
Again on Second Reading, the Minister noted:
"Any acquisition would of course be a commercial arrangement with the administrator of the same kind that a private buyer might make; the Bill gives the Government no special powers in that regard."-[Official Report, 27 January 2003; Vol. 398, c. 588.]
On the face of it, that is absolutely right. I cannot take issue with it. However, in practice, the argument is nonsensical. The Government can manipulate the market, and may have done so already. That being the case, if the Government were to put the provisions that we are discussing into effect, how could they reach a fair valuation if they were to buy British Energy or parts of it? It would be impossible, and it would give clear cause for shareholder or creditor class action. From reading many of the speeches on Second Reading, I saw clearly that there had been a general misconception of what administration involves. Most hon. Members seemed to believe that administration could lead to the sale of British Energy, either to a third party or to the Government. The possibility of such a sale is contained in clause 1(1)(b). However, in practice it is rare that administrators will sell assets in the form of shares, because purchasers coming to an administrator want to cherry-pick. They want to choose the assets that they want to buy. In most cases, they will not accept taking all the assets. Even if they do, they will not want to take all the liabilities. As far as possible, they will leave the liabilities with the company in administration. Clearly, that means that buyers may wish to acquire individual power stations rather than the whole lot. Of course, they will do that only if they are not scared off by the Bill, the lack of a White Paper and the threat of nationalisation. They are undermining the whole process.
When the Trade and Industry Committee conducted an inquiry into the security of energy supply, one feature that shone through when we considered the gas market was that the key to its success-it is generally considered to have been successful in recent years-has been its freedom and the adaptability that results from the freedoms that it has. Rather than providing for nationalisation and greater inefficiencies in the market, why cannot we now draw a line on intervention and accept that the market will eventually have its own way and that intervention will fail?