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Nuclear Decommissioning Authority: Departmental Review Departmental Review Nuclear Decommissioning Authority June 2021 Departmental Review of the Nuclear Decommissioning Authority, 2021 © Crown copyright 2021 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]. Where we have identified any third-party copyright information you will need to obtain permission from the copyright holders concerned. Any enquiries regarding this publication should be sent to us at: [email protected] 2 Departmental Review of the Nuclear Decommissioning Authority, 2021 Contents 1. Glossary & Key Terms ___________________________________________________ 4 2. About this Report _______________________________________________________ 7 3. Executive Summary _____________________________________________________ 8 4. Recommendations _____________________________________________________ 13 5. The NDA’s Purpose and Function __________________________________________ 18 5.1 Introduction ________________________________________________________ 18 5.2 Strategic Coherence and Alignment with Government Priorities ________________ 23 5.3 Classification & Form ________________________________________________ 45 6. Oversight by Central Government __________________________________________ 50 6.1 Oversight and Sponsorship ____________________________________________ 50 6.2 The Department’s Understanding of the NDA’s Key Risks ____________________ 64 6.3 Overall Level of Scrutiny of the NDA by Government ________________________ 67 7. The NDA’s Internal Governance and Structure ________________________________ 72 7.1 Structure of the Strategic Authority and Group Businesses ___________________ 72 7.2 The Parent Body Organisation Model versus Wholly-Owned Subsidiaries ________ 76 7.3 Responsibilities and Accountabilities Across the Group ______________________ 84 7.4 “One NDA” ________________________________________________________ 94 7.5 NDA’s Performance Against the Governance Code _________________________ 97 8. The Operational Health and Effectiveness of the NDA __________________________ 98 8.1 Spending Approvals for Major Programmes _______________________________ 98 8.2 The NDA’s People Strategy __________________________________________ 104 Annex A: Terms of Reference _______________________________________________ 118 Annex B: The NDA’s Operating Businesses ____________________________________ 123 Annex C: Principles of Corporate Governance ___________________________________ 127 Annex D:Summary of Recommendations from the Public Accounts Committee _________ 136 Annex E: People and Organisations Consulted __________________________________ 144 3 Departmental Review of the Nuclear Decommissioning Authority, 2021 1. Glossary & Key Terms AO Accounting Officer ARAC Audit and Risk Assurance Committee AGR Advanced Gas-cooled Reactor BEIS Department for Business, Energy and Industrial Strategy BNFL British Nuclear Fuels Ltd CEO Chief Executive Officer CFO Chief Financial Officer CNPP Combined Nuclear Pension Plan CO Cabinet Office CSRP Cyber Security and Resilience Programme CV-19/ COVID-19 Coronavirus-19 DIT Department for International Trade DRS Direct Rail Service Ltd DSRL Dounreay Site Restoration Ltd EA Environment Agency ExCo Executive Committee FBC Full Business Case FOI Freedom of Information FRC Financial Reporting Council GDF Geological Disposal Facility GIAA Government Internal Audit Agency HMG Her Majesty’s Government HMT Her Majesty’s Treasury HR Human Resources 4 Departmental Review of the Nuclear Decommissioning Authority, 2021 HSE Health and Safety Executive IFRS International Financial Reporting Standards KPI Key Performance Indicator LLW Low Level Waste LLWR Low Level Waste Repository Ltd MOD Ministry of Defence MPM HM Treasury’s “Managing Public Money” NAO National Audit Office NDA Nuclear Decommissioning Authority NDPB Non-Departmental Public Body NED Non-Executive Board Director NLF Nuclear Liabilities Fund NRW Natural Resources Wales ONR Office for Nuclear Regulation ONS Office for National Statistics P&PC Programmes and Projects Committee P&R Performance and Risk Committee PAC Public Accounts Committee PAO Principal Accounting Officer PBO Parent Body Organisation PNTL Pacific Nuclear Transport Ltd PO Partner Organisation (term used in BEIS for Arm’s Length Body) PPP Programme and Project Partners model at Sellafield PQ Parliamentary Question QPR Quarterly Performance Review R&D Research and Development 5 Departmental Review of the Nuclear Decommissioning Authority, 2021 RACI Responsible, Accountable, Consulted, and Informed REMCO Renumeration Committee RWM Radioactive Waste Management Ltd S&SC Safety and Security Committee SEPA Scottish Environment Protection Agency SFL Springfields Fuels Ltd SGHWR Steam Generating Heavy Water Reactor SIRO Senior Information Risk Owner SLC Site Licence Company SME Small and Medium-sized Enterprise SO Strategic Outcomes STEM Science, Technology, Engineering and Mathematics SRO Senior Responsible Officer THORP Thermal Oxide Reprocessing Plant UKGI UK Government Investments VfM Value for Money 6 Departmental Review of the Nuclear Decommissioning Authority, 2021 2. About this Report 2.1 This report summarises the findings and recommendations of the Departmental Review of the Nuclear Decommissioning Authority. In 2020 the Government decided to end the Tailored Review1 programme of Arm’s Length Bodies, and to replace it with a new programme, the details of which will be finalised in due course. BEIS took the decision to continue the evidence-gathering under the auspices of a departmental, rather than Tailored Review, given long-standing public commitments made to carry out and publish an assessment of the form, function and effectiveness of the NDA. 2.2 Although this is a review carried out by a team housed within BEIS, its contents should not be taken necessarily as a statement of Government policy. BEIS will respond formally to its recommendations in due course. The review team were organisationally independent of the Energy and Security Group, with the lead reviewer reporting directly to the BEIS Chief Operating Officer, and with independent challenge provided by one of the departmental Board non-executive directors. 2.3 The fieldwork for the review was concluded before the publication of the final Magnox Inquiry2 Report, which looked into the award of the Magnox decommissioning contract by the NDA, and its subsequent termination. The Inquiry focused on a particular and distinct set of events and circumstances, so this report does not directly address its findings; however, where there are obvious points of commonality, it makes reference to them. 2.4 The Terms of Reference for the review are at Annex A. 1 https://www.gov.uk/government/publications/tailored-reviews-of-public-bodies-guidance 2 https://www.gov.uk/government/collections/magnox-inquiry 7 Departmental Review of the Nuclear Decommissioning Authority, 2021 3. Executive Summary 3.1 The NDA was created in 2004 to manage the clean-up of the UK’s earliest nuclear sites and release them for their next planned use. This fundamental mission remains a pressing one. NDA manages risks and hazards that are among some of the most challenging in the world. It does so on 17 sites across England, Scotland, and Wales, covering more than 1000 hectares of land designated as nuclear licensed sites, and through eleven business, employing more than 15,000 people. The mission covers the decommissioning and remediation of land, the management of nuclear materials and spent fuel, and the management of nuclear waste. While there is little serious argument about NDA’s core mission or the strategic policy outcomes that the NDA was created to achieve, there has been more debate about how that should be done. 3.2 In recent years, the NDA has been an organisation under considerable scrutiny. It has attracted significant attention at times from the media, its regulators, and Parliament, and most recently the Holliday Inquiry into the awarding of the Magnox contract was published in March 20213. It is clear from the many interviews we undertook with NDA staff that the events surrounding that decommissioning contract in 2014 – prompting among other things the Independent Inquiry that for legal reasons was not able to report as quickly as expected, an NAO report and a PAC inquiry - have cast something of a long shadow across the organisation. Strategy and Functions 3.3 The new senior leadership recruited post-Magnox has put in train some significant reforms to the overall management of the organisation, not least a series of one-off decisions to bring businesses formerly contracted out to the private sector back in- house as wholly-owned subsidiaries. 3.4 The NDA has invested considerable effort in articulating a clear high-level strategy that surfaces some simplicity from a highly complex organisation, aligned with a clearly communicated and coherent set of objectives delivered by its various operating companies. 3.5 We conclude that the principal functions of the NDA as set out in its founding legislation are still the right ones, determining its core mission, focusing on site decommissioning and remediation of land so that the country can finally use it for a different purpose. NDA needs to continue to drive up its knowledge and understanding of the state
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