ONR BOARD MEETING Paper No ONR/14/05/02a Meeting Date: 24 June 2014 Agenda item: 02a FOI Exemptions FOI Status: Open TRIM Ref: 2014/210027

Minutes of the ONR Board Meeting held at 10.00 on Thursday 1 May 2014 at Arkle/Orchid Rooms St James House St James Square Cheltenham GL50 3PR

Board members present: Also attending: – Chair Dave Caton Steve Bundred Kathy Donnelly Jonathan Baume Claire Lyons John Crackett Edwina Hinton (items 1 – 9) Andy Hall David Senior (item 3 only) John Jenkins Andy Lindley (items 9 & 10) Les Philpott Mike Finnerty (item 9 only) Liz Siberry Chris McEwan (items 10 & 11)

Secretariat: Sue Johns

1 WELCOME, INTRODUCTIONS, APOLOGIES FOR ABSENCE AND DECLARATIONS OF INTEREST

1.1 Nick Baldwin welcomed members to the first full meeting of the statutory ONR Board. He noted that ONR had vested successfully and congratulated the Essentials for Vesting (E4V) team for their timely project delivery. He also congratulated all who had been involved in making the Corporation Day event such a success. There were no apologies for absence or declarations of interest.

2 ITEMS FOR DECISION/DISCUSSION RELATING TO ONR AS AN AGENCY OF HSE

2.1 Minutes of the last meeting held on 25 February 2014 – Paper ONR/14/04/01

2.1.1 The minutes of the last meeting held on 25 February 2014 were agreed.

2.1.2 John Jenkins noted that they recorded all the then speculative items that the Executive said would happen and had subsequently come to pass. Les Philpott commented that the separation from HSE Shared Services had been a particular challenge but all staff had been paid and received expenses. He paid tribute to the efforts of those who had made that possible under the leadership of Paula Wheeler.

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2.2 Matters Arising

2.2.1 There were no matters arising. . 2.3 Summary of Board Decisions and Action Log as at 31 March 2014 – Paper ONR/14/04/02

2.3.1 The summary of the decisions and actions, all completed, was noted.

3 Finance, Performance and Assurance Report – Paper ONR/14/04/03

3.1.1 Kathy Donnelly noted that the report being presented was for Q3 but that action was being taken to improve the timeliness of reporting, as requested by the Board, and the intention was to present Q1 2014/15 at the July meeting. Nick Baldwin warmly welcomed this move.

3.1.2 Kathy Donnelly reported that performance of corporate functions was healthy: the Essentials for Vesting delivered successfully; the actual spend against the mid-year profile was +1% (well within the Board’s target of +/-3%); and sickness absence was well below the comparator. For 2014/15, the comparator has been replaced by the target published in the Annual Plan (average of 5.5 days per person).

3.1.3 Regulatory delivery continued to show an improving trend with indicative outturns for the year of 92% of planned Licence Condition inspections completed and 97% of planned system based inspections completed against targets of 95% and 100% respectively. Although below target, the trend towards improvement, resulting from management action taken following the Q1 report and the successful embedding of new processes in relation to system based inspections, will continue into the new financial year.

3.1.4 Les Philpott highlighted that the marked improvement was a direct result of management action. Steve Bundred and John Crackett concurred that the current report is an example of best practice and ample assurance that the business was well managed. John Jenkins reminded fellow Board members that there was still much to do; the next phase was to determine how progress could be measured.

3.1.5 Nick Baldwin enquired as to when the missing data for and the GDA work would be available. Kathy Donnelly responded that work was in hand with the relevant programmes to identify meaningful indicators and that these are expected to be included in the Balanced Scorecard by Q2.

3.1.6 David Senior introduced the Q3 Assurance report. The key conclusion of the evidence presented was that our regulatory activities have provided assurance of the continued safety and security of the industry. The report summarised key milestones delivered against the operating plan and, with the Board’s consent, would be sent to the Secretary of State DECC.

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3.1.7 David Senior highlighted the following:  He had raised the small number of system based inspections and shortfall on compliance inspection delivery in the Defence programme with the new Programme Director, Richard Savage.  An unacceptable level of compliance (7% of planned inspections completed) in Transport inspections had also been reported during that period; corrective actions had been put in place.  He had previously raised the management of regulatory issues at Sellafield as a risk however the Programme was showing much improvement on quality of information and active management of issues to closure.  Regarding enforcement action, ONR had issued an Improvement Notice to Sellafield following a “Conventional Health and Safety” inspection that highlighted shortfalls on the prevention of exposure to Legionella. This demonstrated that the conventional safety regulatory function was now firmly established within ONR and the staff secondment arrangements with HSE were working well.  The highly complimentary letter from Rt Hon MP, the Secretary of State DECC, following the submission of Q1 and 2 reports was referred to. It confirmed ONR’s assurance reporting was meeting the Minister’s expectations and encouraged further development of the process and metrics.

3.1.8 Finally, David Senior outlined the improvement that had been put in place for data collection and the production of these reports in a timelier manner. The Q4 report would be the last in the current format and would come to the June Board meeting. The Q1 report for this financial year would follow a new approach and would be provided to the July Board meeting. It would be a shorter more focused report and this had been agreed with government. David emphasized that it still maintained reference to and measurement against KPIs and milestones and would continue to form the basis of the CNI’s Annual Report.

3.1.9 Nick Baldwin asked whether news of the Improvement Notice issued to Sellafield had been publicised and highlighted how impressed the Rt Hon Mike Penning MP, Minister of State for Disabled People DWP, had been with the recent successful conviction brought by ONR against Sellafield. Claire Lyons confirmed that such actions are covered as a news story on the day but where an Improvement Notice was involved there was a delay of 21 days before it could be made public.

3.1.10 John Crackett asked for clarification as to the meaning of the 145% figure in balanced scorecard 3.3 – Inspections: Cumulative % achieved to plan (excluding System Inspections). David Senior explained that this was a function of the summation of reactive and proactive inspections.

3.1.11 John Jenkins noted the IRRS would return for a further mini-ission in November this year. David Senior confirmed the 2013 mission report had been published on 16th April. A project team with appropriate governance arrangements had been established under David’s leadership and it was noted that good progress had already been made in relation to closing out the new findings. He confirmed that the scope of the mini- mission had been agreed between John Jenkins, DECC Officials and the IAEA.

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3.1.12 In conclusion, Nick Baldwin congratulated the management on a greatly improved report and the Board gave its consent for the report to be sent to the Secretary of State DECC, copied to DWP.

Action The Board approved the Q3 Assurance Report for submission to DECC, copied to the DWP Minister for information. Kathy Donnelly

ITEMS FOR DECISION/DISCUSSION RELATING TO ONR AS A PUBLIC CORPORATION

4 Minutes of the Statutory ONR Board meeting on 12 March 2014

4.1 The ONR Board noted the Minutes.

5 Chair’s Report – Oral item

5.1 Nick Baldwin noted that he had begun a series of meetings as part of the Advocacy Programme and, as part of that, had done some refresher Media Handling training. With respect to the media, he had already met the Financial Times and was due to meet a number of other newspapers and trade journals in the coming weeks. He and John Jenkins had met their counterparts from the Nuclear Decommissioning Authority and had discussed Sellafield among other topics.

5.2 Nick Baldwin reported that he had been asked to join the and Utilities Forum, a group that met under “Chatham House” rules. The topic of the next meeting was the Competitions and Markets Authority. He had also joined the Public Chairs’ Forum, which provided an excellent networking opportunity for him with chairs of other regulators. He was unable to attend the next meeting but Steve Bundred had agreed to go in his place.

5.3 With John Jenkins, he had visited Dungeness A and B and had seen Peter Hayes (a safety trained Inspector) take action on a security matter; he cited this as an example of exactly the sort of integrated regulatory activity that ONR should be carrying out and that he found this reassuring. The visit was very informative; he and John had also been able to see Dungeness during the outage.

5.4 Nick Baldwin and other ONR Board members had attended the NGO Forum the previous week and it was clear that it was no longer working as a way to engage constructively with this group of stakeholders.

5.5 Nick Baldwin and Les Philpott had met Baroness Verma and the Rt Hon Mike Penning MP on a number of occasions, including Corporation Day. However, both Ministers had now reduced the frequency of meetings. Les Philpott noted that this was a very positive sign and demonstrated a sea change in Ministers’ confidence in ONR.

5.6 Nick Baldwin, and Jonathan Baume, had attended HSE Board meetings and its recent Strategic Planning event.

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6 HSE Matters – Oral item

6.1 There was no discussion on this item.

7 ONR Chief Executive’s Report - Paper ONR/14/04/07

Assurance Matters

7.1 Referring to his written report, John Jenkins noted that the Corporation Day event in St George’s Hall had been very successful and that he would be sharing a summary of the feedback with Ministers.

7.2 He also informed members that from this meeting he would be providing an Accounting Officer’s Report. To date he had met Robert Devereux, DWP Permanent Secretary, for a very positive meeting. The Permanent Secretary had offered assistance should any be required and he had agreed with John that it would not be necessary to meet more frequently than twice a year. There was one other matter to report in this section, that of the difficulty ONR were experiencing in closing out the Cooperation Agreement with HSE, which was noted as an obligation under the Energy Act 2013. Nick Baldwin confirmed that he had spoken twice to Kevin Myers, Acting Chief Executive, but John had still not received the written letter of confirmation. In answer to John Crackett’s question, John Jenkins noted that the only other unfinished business was set out in paragraph 10 of his written report. ONR had temporarily agreed to take on cover for the Government Technical Advisers (GTA).

7.3 John Jenkins noted that the Senior Leadership Team had taken part in a workshop led by ACAS on Equality and Diversity. He also commented that completion of that data set on RM was only 50% hence it was not representative, and therefore misleading to publish it. Managers would be asked to encourage their staff to complete that data, one option was “prefer not to disclose” however, staff could not be forced to fill it in. It was also noted that this was not unusual in comparison to other departments. The Executive will be working with the Trades Unions to increase awareness of this important requirement.

7.4 John Jenkins informed the Board that he would also be providing a SIRO report in future. He noted that, to date, 80% of staff had undergone training in the new government classification system. With the possible rise in “secret” classifications there was a greater need for increased IT security. There was inconsistent knowledge of the new system among the non-executive Board members. Les Philpott agreed to look into the situation.

7.5 John Jenkins informed the Board the Windows 7, Microsoft, updates would begin again later in May. Some Board members had already completed the cyber-security training and the remainder would do so shortly. Nick Baldwin commented that he had been shocked at the apparent ease by which capable attackers could carry out cyber security attacks and breach IT security. As there were specific responsibilities on the Board, he had requested a presentation on cyber security risks to a future Board meeting. John noted that the responsibility would fall to the Audit and Risk Assurance Committee first and that DECC wanted to hand over the responsibility for this to ONR, who welcomed this.

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7.6 Steve Bundred enquired about the system whereby ONR employees were prevented from misusing their internet access. He noted that in the recent case of scurrilous information posted on the Hillsborough Wikipedia site, a significant amount had been traced back to the Solicitor General’s office. John Jenkins informed him that there were policies and tracking in use and that all staff were security cleared. Les Philpott suggested that management should look into this.

7.7 Les Philpott reported that treasury management since ONR vested as a public corporation had gone extremely well. There had been a few payments that had been made to HSE instead of ONR but he was grateful to David Murray’s quick action to rectify this.

7.8 Finally, referring to Nick Baldwin’s own report regarding the NGO conference, John Jenkins informed the Board that he had written to Pete Wilkinson, Chair of the NGO, expressing his concern about the tone of the meetings and the attitudes of NGO attendees, specifically the lack of respect being shown.

7.9 Andy Hall reported that he and John Jenkins would be engaging with a number of universities, including Imperial College, Manchester and Birmingham. It was hoped that this dialogue would provide a good conduit for graduates to join ONR. Nick Baldwin congratulated ONR on the recruitment of four graduates (Paragraph 19). Andy also noted that a similar targeted approach had now been used to invite organizations to nominate people to attend the CNI’s Panel.

7.10 Steve Bundred referred to paragraph 32 of the written report and, assuming the negotiations with Russia were now paused, asked what the implications were in terms of staff recruitment. John Jenkins acknowledged that there had always been some complications anticipated, but that as the project to look at the proposed Russian reactor had been paused, so Westinghouse had started to push their case again. Hence, he anticipated that there would be no detrimental staffing implications.

7.11 John Jenkins explained that he had asked Donald Urquhart to come to a future Board meeting to provide a briefing on EDF Energy’s concerns with respect to the Sizewell B Detailed Emergency Planning Zone, and to set out likely implications for the balance of the licensed estate.

Regulatory functions

7.12 In addition to the written report, Andy Hall reported that ONR had issued formal cautions to two individuals at Sellafield because of their part in a contamination incident. Sellafield had also taken action against the individuals concerned. It was the first occasion ONR had acted against individuals.

7.13 Andy Hall informed the Board that there would be a review of the Chief Inspector’s report on Fukushima as some of the recommendations had prompted it. He also told them that he had been asked to allow his name to go forward as a nominee for chair the European Nuclear Safety Regulators Group (ENSREG); the first would be later this month when Les Philpott would also attend as the ONR representative.

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7.14 Les Philpott highlighted the need for ONR to interact more closely with the European Commission. He had already met the IAEA Ambassador in Vienna, to discuss plans for the Ambassador to host a reception there for ONR.

7.15 Les Philpott confirmed that he had started to work more closely with DWP and had already met with Jeremy Moore (Director General, Strategy Planning and Analysis Group) and Mike Driver (Finance Director). Finally, a paper on the proposals for the new Board meeting cycle would come to the June meeting.

Actions: Check whether all NED Board members (and Clifford Shanbury) received details of the new government classification system (re security markings) Secretariat

Following the workshop on cyber-security the Board will be given a presentation on their responsibilities at a future meeting. Mike Johnson

A briefing is to be arranged for the Board on DEPZ. Donald Urquhart

Bring a paper to the June Board meeting on proposals for the Board plan. Les Philpott

8 New ONR Strategy - Paper ONR/14/04/08

8.1 Kathy Donnelly introduced the paper, which provided a timetable for the production of a new ONR strategy as required by the Energy Act 2013, and an initial view on ONR’s vision and key strategic themes for the next five years. She invited Board members to endorse the production timetable and to provide their initial comments on the vision and key themes. Nick Baldwin suggested that at this early stage it would be inappropriate to get into too much detail.

8.2 John Crackett acknowledged the work that had been put into improving the organisation, which on all indicators is in a much better condition. He suggested that some refinement of the messaging would be appropriate to allow Directors to paint a two or three paragraph oral picture of the future to staff and stakeholders. He asked the team to consider whether all ONR’s important corporate goals, for example Sellafield, GDA, existing fleet, efficiency, sustainability and communications (internal and external), could be contained within the three themes.

8.3 Liz Siberry commented that the journey that ONR had already undertaken could provide confidence for some of the topics to be combined.

8.4 Steve Bundred commented that openness should be a theme as ONR was still on the journey, for example there was an undertaking to put the Corporate Risk Register into the public domain but that not until it was completed. He also recognised that our relationship with NGOs was an example of how ONR needed to adapt its culture of style and approach.

8.5 In adding his own comments, Nick Baldwin summarised the discussion. He urged those drafting the new Strategy to use language that the public could understand. He also noted that a vision is where ONR aspired to be and the strategy was the plan to achieve it and that differentiation should be clear in the draft strategy. He suggested

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that a measure of how great ONR was as a place to work would be when all in the industry aspired to have that on their CV.

8.6 Responding Les Philpott welcomed the Board’s steer that the proposals in the paper were moving in the right direction. He suggested that the first draft of the new Strategy should be brief, forward looking and focused on how ONR could become an exemplary regulator. The matter would return to the Board in June.

Action Bring the first draft of the new ONR Strategy to the June Board meeting. Kathy Donnelly

9 ONR Strategy for the Regulation of the Sellafield Site: Progress Report - Paper no ONR/14/04/09

9.1 Andy Lindley introduced the progress report. He informed Board members that the Sellafield Programme had consulted widely with stakeholders and had established good working relationships and a common purpose with key organisations. In addition to this effective external engagement, ONR had also reviewed its internal provision and, as a consequence, the team was now leaner and more focused than previously. The number of regulatory issues had been rationalised, from more than two hundred, and was now a manageable fifty one in total.

9.2 ONR had met four other organisations namely, DECC, Sellafield, the Nuclear Decommissioning Authority (NDA) and the Environment Agency (EA). Following discussions with the , (ShEx), it had been agreed that they too should join the core group to demonstrate their commitment but to avoid getting involved in the detail. Teams were in place to lead on eight themes from which twelve projects for the year ahead had been identified and agreed. The following week there would be another workshop for the six lead organisations with an aim to develop a plan for the next eighteen months and identify indicators against which progress could be measured. Andy noted that these actions all had wide ministerial support and were regularly reported on.

9.3 Mike Finnerty provided supporting detail on the twelve projects that would take forward hazard and risk reduction. The aspiration was that the twelve projects would become case studies that others could use but that would also lead to a greater understanding of what had been achieved.

9.4 John Jenkins acknowledged that this had been a massive change of approach and congratulated the team on their progress to date. He noted that there had been a need to move away from some issues in order to keep a balance and establish projects that will produce real improvements. Andy Lindley emphasised that, irrespective of the joint working, ONR were still carrying out their regulatory and enforcement duties.

9.5 Steve Bundred added his congratulations to the team for the progress that had already been made, however he was anxious that the timeline was not especially fast. Mike Finnerty noted that the prioritisation of the twelve projects had been important, having established that a clear plan for the way ahead should be available next month with an identified baseline against which to measure movement.

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9.6 Welcoming the reshuffle of the Senior team in ONR, Liz Siberry asked whether a similar process had been undertaken by Sellafield. Andy Lindley informed the Board that Sellafield were now inviting members of the ONR team to meet and talk to them regularly about what "special arrangements" means in practice .

9.7 John Crackett was reassured by the progress report and suggested that ONR find a way to portray what had been achieved already so that the message can be sent to Ministers. Nick Baldwin concluded by agreeing that ONR had a compelling story.

10 Licence Conditions Review: Project Plan - Paper no ONR/14/04/10

10.1 Andy Hall briefly introduced the paper noting that it contained much promise; he handed over to Chris McEwan for a more detailed view. Chris noted that Andy Hall had given a presentation on this topic at the August 2013 strategy meeting, as a consequence outlines for areas where licence conditions could be tightened had been identified. The IRRS Mission had also recommended regular reviews.

10.2 Chris McEwan acknowledged that the paper sought the Board’s endorsement to begin the work and informed them that it would be modelled on the successful Essentials For Vesting project. Andy Hall would be supported by David Senior as project director and there would be a team below them drawn from across ONR. The areas of perceived weakness of licence conditions would be run as separate work streams, which would be fed into the central project team. It was envisaged that the project would take two months to set up, with all documents in place. A further six months would then be required for exploration, consultation and collaboration to determine the options for the review.

10.3 The project team would update the Board on progress in January 2015. There was a range of potential outcomes; a light-touch delivery option would be achievable to April 2016. For something requiring more extensive change and therefore needing legislative amendment the end date was more likely to be 2020.

10.4 John Jenkins noted that the review of Licence Condition 3 had just been completed as that something wider-ranging was needed. Les Philpott commented that previously, changes to the licensing regime had been carried out in isolation, however ONR must now work with government, in particular BIS, to ensure that it aligns with government policy on reducing the regulatory burden.

10.5 Nick Baldwin noted that ONR was formed to remove the risk of political interference in regulatory activity so it was important that ONR managed the process of this review properly. Andy Hall commented that the intention was to modernize and streamline the regulatory process hence it would feed into the Better Regulation agenda well. Nick Baldwin noted that updates would be needed for his regular meetings with Ministers. The Board endorsed the proposals and welcomed the suggestion of an update paper in January 2015.

Action Bring an update paper to the Board meeting in January 2015. Chris McEwan

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11 HSE’s Consolidation of Explosives Regulations: ONR Fees - Paper no ONR/14/04/11

11.1 Chris McEwan introduced the paper, policy colleagues had been working closely with teams responsible for explosives and acetylene since November 2013, in particular during the development of ONR's Consequentials Order. The Explosives and Acetylene Consolidation exercises were designed to take disparate and old legislation and combine into a framework that was more easily understood.

The Board agreed to formally propose explosives and acetylene fees for ONR’s activities.

12 Date and Venue of the next meeting

12.1 The Board would meet next on Tuesday 24 June at 09:00hrs in Redgrave Court, Merton Road, Bootle.

BOARD COMMITTEE MATTERS

13 Minutes of the ONR Remuneration Committee meeting held on 25 March 2014 – ONR/14/04/13

13.1 John Crackett noted that Dave Caton would be bringing an interim paper to the Board in July on Executive Remuneration. John Jenkins informed the Board that two other pieces of bench-marking were also being undertaken for the wider SCS and all other staff as part of the same exercise.

14 Minutes of the ONR Security Committee Meeting held on 27 March 2014 - Paper ONR/14/04/14

14.1 Liz Siberry noted that the Committee needed to consider its role at its meeting in July.

15 Minutes of the ONR Audit and Risk Assurance Committee Meeting held on 7 April 2014 - Paper ONR/14/04/15

15.1 Steve Bundred informed the Board that the clearance of the governance statement and accounts had been focused to HSE’s process; this would not be the case in future.

ITEMS FOR INFORMATION

16 Implementation of the Basic Safety Standards Directive – Paper ONR/14/04/16

16.1 There was no discussion.

17 Update on Licence Condition 3 – Paper ONR/14/04/17

17.1 There was no discussion.

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18 Re-warranting of ONR for the Energy Act – Paper ONR/14/04/18

18.1 There was no discussion.

The meeting closed at 12:15 hrs.

Approved by Nick Baldwin, ONR Chair

24 June 2014

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