Commentary on Sections Section 1: Expenditure relating to British Energy plc
7.This section provides authority for various kinds of expenditure relating to British Energy to be paid out of money provided by Parliament through normal supply procedures. The exercise of these powers is subject to the consent of the Treasury. This conforms with the long standing practice that significant ongoing expenditure should have specific statutory authority.
8.Subsection (1)(a) authorises expenditure incurred in giving financial assistance to British Energy plc or any of its subsidiaries. This is in addition to the power that already exists to give financial assistance for nuclear liabilities under Schedule 12 to the Electricity Act 1989. Subsection (1)(a) could be used while the British Energy companies remain in the private sector, but could equally be used to fund the administration of the companies or to fund the company if the Government has acquired British Energy plc or its subsidiaries (as foreseen in subsection (b)(i)). Financial assistance includes assistance by way of grant or loan or by entering into a guarantee in respect of any obligations of British Energy.
9.Subsection (1)(b) authorises expenditure in connection with the acquisition of a British Energy company, its business or its assets. This could be done either through the purchase of British Energy plc or its subsidiaries directly (through the purchase of the ordinary shares), or alternatively through buying the underlying business (undertaking) and/or assets from the company that owns them without buying the Companies Act company that contains them. These provisions merely give Parliamentary authority to incur expenditure for this purpose. They do not give the Government any special power to acquire (compared with a normal buyer) nor do they put the company under any obligation to sell.
10.Subsection (1)(b)(i) enables the acquisition of ordinary shares and also other securities such as bonds and debentures. Acquisition could be made directly by Government, its nominee, or through a 100% Government owned company (a ‘Crown company’).
11.Subsection 1(c) follows on from subsection 1(b) and authorises continued funding if the Government acquires the business and/or assets of a British Energy company under (1)(b)(ii). If the Government acquired companies under (1)(b)(i) then it would be authorised to continue to fund those companies under subsection (1)(a). But if it only acquired the businesses and/or assets separately from the British Energy companies, then subsection (1)(a) would not provide the relevant authority, hence this additional provision.
12.Any expenditure under this section could only take place to the extent that it is permitted by the EC State Aid rules.