House of Commons Trade and Industry Committee The Work of the NDA and UKAEA Sixth Report of Session 2005–06 Report, together with formal minutes, oral and written evidence Ordered by The House of Commons to be printed 18 July 2006 HC 1028 Published on 16 August 2006 by authority of the House of Commons London: The Stationery Office Limited £15.50 The Trade and Industry Committee The Trade and Industry Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department of Trade and Industry. Current membership Peter Luff MP (Conservative, Mid Worcestershire) (Chairman) Roger Berry MP (Labour, Kingswood) Mr Brian Binley MP (Conservative, Northampton South) Mr Peter Bone MP (Conservative, Wellingborough) Mr Michael Clapham MP (Labour, Barnsley West and Penistone) Mrs Claire Curtis-Thomas MP (Labour, Crosby) Mr Lindsay Hoyle MP (Labour, Chorley) Mr Mark Hunter MP (Liberal Democrat, Cheadle) Miss Julie Kirkbride MP (Conservative, Bromsgrove) Judy Mallaber MP (Labour, Amber Valley) Rob Marris MP (Labour, Wolverhampton South West) Anne Moffat MP (Labour, East Lothian) Mr Mike Weir MP (Scottish National Party, Angus) Mr Anthony Wright MP (Labour, Great Yarmouth) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.publications.parliament.uk/pa/cm/cmstords.htm Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at http://www.parliament.uk/parliamentary_committees/trade_and_industry.cfm. Committee staff The current staff of the Committee are Elizabeth Flood (Clerk), Glenn McKee (Second Clerk), Robert Cope (Committee Specialist), Grahame Allen (Inquiry Manager), Clare Genis (Committee Assistant) and Joanne Larcombe (Secretary). Contacts All correspondence should be addressed to the Clerks of the Trade and Industry Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5777; the Committee’s email address is [email protected]. Footnotes In the footnotes of this Report, references to oral evidence are indicated by ‘Q’ followed by the question number. References to written evidence are indicated in the form ‘Appendix’ followed by the Appendix number. 1 Contents Report Page Work of the NDA and UKAEA 3 Introduction 3 Work of the UKAEA and NDA 3 The Nuclear Decommissioning Authority 5 United Kingdom Atomic Energy Authority 9 Research into nuclear fusion 11 Conclusions and recommendations 14 Formal minutes 16 List of witnesses 17 List of written evidence 17 3 Work of the NDA and UKAEA Introduction 1. At the start of this Parliament, we decided to initiate a series of short inquiries looking at the work of some of the 50 or so Executive Agencies and Non-Departmental Public Bodies (‘NDPBs’) associated with the Department of the Trade and Industry, and which fall within our scrutiny remit. Obvious candidates for early consideration were the Nuclear Decommissioning Authority (‘NDA’) and the United Kingdom Atomic Energy Authority (‘UKAEA’), partly because the whole issue of nuclear decommissioning is a focus of current discussion owing to the Government’s Energy Review, and partly because our predecessors had undertaken detailed inquiries into the proposals for the agency which eventually emerged as the Nuclear Decommissioning Authority.1 2. Our terms of reference for the inquiry were to examine: — The remit and activities of the NDA and UKAEA; — The compatibility of current plans for the NDA and UKAEA with any increased reliance on nuclear power generation; and — The NDA and UKAEA's performance and accountability. 3. We took oral evidence from Sir Anthony Cleaver, Chairman, and Dr Ian Roxburgh, Chief Executive, of the NDA; and from Mr Dipesh Shah, Chief Executive, Mr Stephen White, Director of Business Strategy, and Professor Sir Chris Llewellyn Smith, Director of the Culham Division, of the UKAEA. We received memoranda from both these organisations and from 16 other companies, trade associations and individuals, which are listed on page 17. Some of us also visited the JET facility at Culham. We are grateful to all those who provided evidence to us, and those who arranged our visit. Work of the UKAEA and NDA 4. The Nuclear Decommissioning Authority, which became fully operational on 1 April 2005, was created under the terms of the Energy Act 2004, with the task of producing the first ever UK-wide strategy for decommissioning and cleaning up civil nuclear sites. According to the DTI: “The aim is that, as a procurement authority, NDA will use competition of opportunities in clean-up, to find contractors able to deliver safe, environmentally 1 Trade and Industry Committee, Managing the Nuclear Legacy: Comments on the Government White Paper, Fifth Report of Session 2001–02 (HC 1074); Managing the Nuclear Legacy : Responses to the Committee’s Fifth Report of Session 2001–02, First Report of Session 2002–03, HC 86; and Trade and Industry Committee, The Nuclear Decommissioning Authority: Pre-Legislative Scrutiny of the draft Nuclear Sites and Radioactive Substances Bill, Seventeenth Report of Session 2002–03 (HC 968) 4 responsible, cost-effective and accelerated restoration of old nuclear sites. The NDA will ensure that decommissioning in the UK uses innovative approaches being developed elsewhere and will spread best practice across its sites. It has an obligation to manage the socio-economic consequences of closing sites down.”2 5. The NDA is responsible for the clean up of all civil nuclear sites, except those operated by British Energy (primarily the younger nuclear power plants: the seven Advanced Gas- cooled Reactors and the Pressurised Water Reactor at Sizewell B) and the JET fusion facility at Culham.3 The Government has already transferred to the NDA property rights and liabilities formerly owned by British Nuclear Fuels Ltd (BNFL): the fleet of Magnox nuclear power stations;4 the facility at Springfields (near Preston) for the manufacture of nuclear fuel; and the parts of the Sellafield site used for the production of nuclear fuel (the MOX plant), reprocessing of spent nuclear fuel (the Thermal Oxide Reprocessing Plant, or THORP), and interim storage of nuclear waste. The Government also intends to transfer to the NDA the nuclear fission research facilities currently within the responsibility of the United Kingdom Atomic Energy Authority.5 6. The United Kingdom Atomic Energy Authority is a much older organisation, having been established in July 1954 with a range of functions relating to nuclear research and the production of nuclear energy. It was responsible for both the civil and military applications of atomic energy in the UK. A number of companies have been spun out from its activities, including BNFL and, in 1996, AEA Technology Ltd. The UKAEA stopped researching nuclear fission in 1994, though it is still leading UK research into nuclear fusion. Its site at Culham near Oxford contains the Joint European Torus (JET), a facility which is part of the European collaboration on R&D into fusion. Since 1994, UKAEA has also concentrated on the decommissioning of its own nuclear sites (at Harwell and Culham in Oxfordshire, Winfrith in Dorset, Windscale in Cumbria and Dounreay in Caithness). At least some of the land thus cleaned up has been sold or leased. The fourth element of the UKAEA’s work is its continuing responsibility for administering an unfunded pension scheme for UKAEA employees and others.6 The UKAEA currently administers more than two-thirds of all pensions in the nuclear industry in the UK, and it hopes that the NDA will choose the UKAEA to administer the Industry Wide Scheme for all workers on NDA sites.7 7. Both organisations face major difficulties in fulfilling their roles. 2 Appendix 6, para 3 3 Under the terms of the restructuring of British Energy (following its financial difficulties in late 2002), the NDA acts as agent for the Government in administering the legal agreements which cover the funding and management of British Energy’s nuclear liabilities. In particular, while British Energy makes payments into the Nuclear Liabilities Fund to finance the decommissioning and clean up of its facilities, the NDA is responsible for authorising payments out of that fund: see Appendix 2, para 1 (British Energy) and Q 50 (NDA) 4 Built between the 1950s and 1970s 5 Appendix 6, para 4 6 UKAEA’s Memorandum (Appendix 18) lists some of the “others” whose pensions are administered under the scheme as employees of BNFL and RWE Nukem (para 5.1) 7 Appendix 18, para 5.2 One of the concerns raised with the previous Committee when it was considering the proposal to establish the NDA was the security of the pension rights of employees due to be transferred from their current employers to the NDA as sites were handed over to the NDA for decommissioning: Seventeenth Report of Session 2002–03, paras 48–51. 5 The Nuclear Decommissioning Authority 8. As already mentioned, our predecessors in the last Parliament undertook several inquiries into the arrangements for the decommissioning and disposal of civil nuclear liabilities. In its first Report on this subject, the previous Committee expressed three principal concerns—which remain the most difficult issues for the NDA to this day: — that the full extent of the liability was unclear because no one knew exactly what wastes were stored, particularly at Sellafield; — that there should be sufficient funding for the authority to be able to carry out its job effectively, to which end the Committee recommended the establishment of a segregated fund mechanism;8 and — that there should be a rigorous analysis of the assets to be transferred to the new authority (in particular, the Magnox, MOX and THORP plants), especially of the extent to which they could reasonably be expected to contribute income to the new authority and thus to reduce the need for direct taxpayer subsidy for decommissioning.9 9.