Question: What do you think the government's chances of success are in agreeing a restructuring deal for British Energy?

Crispin Blunt: Limited, taxpayers support to British Energy is anti-competitive, other operators in the electricity industry will have a legitimate point to make about that, I expect the European Union competition authorities to strike this deal down even if it got approval this year.

Question: Assuming that there is a deal reached, could electricity prices result in more trouble a few years further down the line?

Crispin Blunt: Given that the taxpayer has now taken a significant chunk of the risk, that situation would be unlikely for British Energy.

Question: Is it acceptable for taxpayers to help fund the rescue of British Energy?

Crispin Blunt: The government is following the wrong strategy here, they are taking power in the legislation to spend an unlimited amount of taxpayers' money supporting British Energy, that is the wrong strategy.

Question: You fear ministers are in effect offering a blank cheque to the company?

Crispin Blunt: That is what parliament is being invited to sign up to with the legislation that's currently going through the House of Commons.

Questions: What is the Conservative position?

Crispin Blunt: That the market should be allowed to operate. That means that if the directors of British Energy think they can no longer legally trade, they can't cover their positions - then the obvious alternative is that the company goes into administration.

The consequences of the government intervening to rescue the company in some form, or taking it back into public ownership, are all worse than putting it into administration.

Question: If British Energy went into administration, would you see it coming back out again?

Crispin Blunt: Yes, it would come back out again. With the decommissioning liabilities taken by the government, the power stations and the workforce could be sold, they are an asset that on their own generate power and cash.

Question: Does the fall in electricity costs mean that it is no longer economic to generate nuclear power?

Crispin Blunt: It is not economic to generate if they are trying to address all of the costs associated with the business. A lot of those costs are repaying the capital raised to pay for the plants - in other words the shareholders' and the bondholders' money. Equally there is money being put aside to address the whole issue of the future nuclear liability.

If you relieve the business of actually paying those costs by putting it into administration - the shareholders and the bondholders in effect lose their money - those individual power stations, with their workforces, with all the capital costs removed, make money even at today's electricity prices. There is a positive asset to be sold out of administration.

Question: Has the government been forced to introduce legislation allowing in effect for the renationalisation of British Energy?

Crispin Blunt: It is quite unnecessary, shorn of the nuclear liability there is almost certain to be a positive asset to be sold back into the private sector.

An important issue here is the future of electricity generation in the United Kingdom. If this company ends up in public ownership, or it ends up as the government are proposing with the rescue package, there is not the slightest chance that the government will come forward with proposals for new nuclear generating capacity.

In five or ten years time we may need new nuclear generating capacity to generate electricity which in the most economically efficient way meets our climate change obligations, we can be certain we will not have that option available to the country if the company is either nationalised or rescued in the way the government is proposing.

Question: Are there parallels between the problems of British Energy and Railtrack?

Crispin Blunt: There is a slight overlap here, but one has to say that the position of Railtrack was wholly and completely undermined by the actions of the government. That is why the shareholders were entitled to proper compensation, because the government was overwhelmingly responsible for the difficulties that company got into by the way they behaved after taking office in 1997.

The case of British Energy is different. The government has contributed significantly to British Energy's troubles, with the climate change levy, an unfavourable Business Rate regime, and the financial arrangements with BNFL, a government-owned company, over the cost of reprocessing fuel.

A greater factor to British Energy's demise has been the liberalisation of the electricity market, in this market, a very challenging one for electricity generators, British Energy has followed a commercial strategy for the last few years which has been catastrophic for its shareholders and bondholders. That is the major factor that has led to their current position.

Question: What is your view on the rate at which British Energy's North American assets are being sold?

Crispin Blunt: There was one defensible reason for the government coming to the rescue of British Energy with its emergency loan of £650 million, to protect the value of British Energy's North American asset, Bruce Power.

British Energy had arrived at an agreement over Bruce Power with the Ontario [Canada] government which covered all eventualities, including future problems at British Energy. This agreement meant if British Energy ran into future problems and was not able to put up a C$100 million bond at the request of the Ontario government - to ensure the company could go on operating, the right to run Bruce Power would revert to the landlord, the Ontario government. If British Energy went into administration, they would lose control of Bruce Power. The value of Bruce Power is about £600 million, it is a significant cash generator when complete and on line.

The government has rescued British Energy, but the price of that rescue is to insist that it sells Bruce Power, so the government can be repaid its "rescue loan" of £650 million. The result, of course, is that there is a fire sale going on, they are likely to get about half the value for Bruce Power they could have obtained if they sold Bruce Power in an orderly fashion with no particular time pressure.

Question: Do you view that as a mistake by ministers?

Crispin Blunt: I think £300 million is a serious amount of money and I think it is an error by ministers.

Question: Would the Conservatives like to see an independent inquiry into the way British Energy's problems have been handled?

Crispin Blunt: I'm not calling for some form of independent inquiry. We have the Public Accounts and Trade and Industry Committee in the House of Commons. They are perfectly well equipped to continue their monitoring of this and to report to parliament. Whether there is then a case for further inquiries we will have to see.

Question: With the deregulation of the energy market, is there a case for saying that British Energy should not have been privatised in the first place?

Crispin Blunt: No, I can't see any argument for that. The United Kingdom has benefited very substantially from a competitive electricity market. Indeed it has been so successful that it is being copied throughout Europe. We have competitive electricity, there is significant oversupply in generation and therefore prices are low.

Question: Is it now for the market to begin closing power stations and reducing capacity?

Crispin Blunt: Yes, that is the logical conclusion. Nobody appears to be making money in electricity generation at the moment, the electricity generators are going to have to work out how they react to that scenario.

Question: Leading to higher prices for consumer?

Crispin Blunt: Of course, and it is very important that we accept that we are operating in a market, price signals must be allowed to feed through to the market which is not constantly being distorted by Government intervention. If prices rise as capacity is removed, investors may build new generating plant. If prices do not rise, no one is going to build any more electricity generating stations and we would then be in trouble.

Question: Looking to the longer term, would nuclear power have a future under a Conservative government?

Crispin Blunt: Yes, it would have a future under a Conservative government if it was the most economically efficient way of generating electricity and enabling us to meet our Kyoto [greenhouse gas] obligations.

A future Conservative government will not seek to direct and decide the precise mix of fuels in generating electricity. We will establish a framework which delivers our Kyoto obligations, within that framework - which will price in the proper cost of carbon and radioactive waste disposal - the market will decide the appropriate fuel mix.

Question: Does that mean you would not take a strategic decision to establish a certain proportion of nuclear generated power in order to reduce reliance on overseas energy supplies?

Crispin Blunt: No we would not make that decision. We have to satisfy ourselves there is sufficient access to required fuel sources, the main issue here is access to gas, gas is already supplying 40 per cent of our total energy needs and that figure is likely to rise in future. We have to take a proper view as to how much gas there is in the world and what is the United Kingdom's likely access to that gas.

On any analysis of the world gas market, and with 100 years of identified supplies of gas in the world, we have a very substantial number of different sources of gas available to the United Kingdom, including the UK continental shelf, what will become available from the north Norwegian seas, the Siberian fields - which are absolutely enormous - piped into the European market, north African gas piped into southern Europe, and from LNG [liquefied natural gas] from countries like Qatar and Iran.

There are a very large number of alternative supplies of gas to the United Kingdom.

Question: And with fears that nuclear power plants could be a potential target for terrorists, does that raise further questions over their future? Is that an issue for energy policy?

Crispin Blunt: Security costs are built into the construction and design costs of the plant, they are the capital costs, as such that is a decision for private investors. Are security costs creating excessive costs for the industry which prevent profits being made? That is a decision for bankers and financiers to make, not government.

Question: What do you expect from the government's Energy White Paper?

Crispin Blunt: An alarming comment made by Brian Wilson is that the Energy White Paper will have no financial consequences for British Energy, that implies government is not going to bring forward any over-arching carbon instrument that would reward both renewable and nuclear generators of electricity for producing electricity in a way that does not contribute to the greatest environmental threat that we face, climate change. That would be a profound missed opportunity.

Question: Nuclear power should be exempted from the climate change levy?

Crispin Blunt: Of course - if it is a climate change levy then they should be exempt from it, the climate change levy was designed to penalise producers of CO2, nuclear electricity produces no CO2. In it's current form the CCL is no more than an energy tax.