Select Committee on Trade and Industry Fifth Report

List of Conclusions and Recommendations


(a)    We welcome the Government's intention to put in place a robust, transparent system for the management of the public sector civil nuclear liability and its plans to transfer responsibility for this task from BNFL and UKAEA to an independent Liabilities Management Authority. We believe that such an arrangement should bring clarity of purpose and responsibility to the management of the nuclear clean-up programme and provide certainty to planning and funding of the programme and to the support available for generic research and development for the nuclear sector. It is essential that the legislation necessary to create the Authority be introduced without delay, so that strategic, long term planning for dealing with the problems associated with the civil nuclear legacy can be put in place as soon as possible. (paragraph 20)

(b)    The nature and management of the LMA's operating contracts and its supervision of its contractors and sub-contractors will be crucial to its success, as will the development of a successful working relationship with the regulators. If successful, both factors could be instrumental in the promulgation of best practice throughout the industry. (paragraph 21)

(c)    While it is inevitable that operating licences will be awarded initially to BNFL and UKAEA, the creation of a competitive market for site management services will be an important element of the LMA's task to improve operating practices and to secure best value for money for the taxpayer. (paragraph 22).

(d)    One of the first tasks of the new LMA must be to provide an independent, authoritative assessment of the civil nuclear liability and keep it under active review to take account of changes in regulatory requirements, better analysis of the waste stockpile, and other relevant factors. (paragraph 25).

(e)    It is vital that the LMA is able to attract people with the highest commercial, management and technical skills to enable it to function properly and to encourage public confidence in its operations. The management of the Authority must be given the freedom and the budget necessary to recruit and maintain such staff. (paragraph 29).

(f)    Contrary to our expectations and BNFL's evidence to us, the 2002 BNFL accounts were not available to the Committee for its deliberation prior to the Recess. We may therefore wish if necessary to take further evidence from BNFL and the Department of Trade and Industry in relation to the transfer agreement between the Department and BNFL (paragraph 36).

(g)    We believe there remain several substantive questions to which the Government should give answers prior to the conclusion of the consultation on the White Paper, as follows:

(i)  If the BNFL balance sheet shows a surplus of liabilities over assets of 1.843 billion, why is it necessary to transfer 4.3 billion more in liabilities than assets to the LMA? This would appear to leave BNFL with a balance sheet surplus of 2.5 billion.

(ii)Why are the assets (principally fixed assets in the form of land and plant   and machinery) forming the spent fuel and engineering business group not also to be transferred to the LMA since, as the White Paper implies (para 5.5), the assets which are "integral to, or may be required for, the on-going management of the liabilities it is taking on" are to be transferred?

(iii) Will BNFL be able to transfer the benefit of commercial agreements to   recover the costs of clean-up of nuclear liabilities to LMA?

(iv)Has the cost of clean-up attributable to the MoD increased and, if so, has   the MoD commitment to pay the costs of this also risen?

(v)How much have the costs of the clean-up attributable to commercial   contracts risen between 2000/01 and 2001/02 and do the agreements with customers permit those extra costs to be recovered; if not, why not? (paragraph 40).

(h)    We have not been able to see the annual accounts of BNFL for 2001/02 before the House rises for the Summer Recess in spite of assurances given by Norman Askew that they would be published on 16 July. Given the tight timescale of the White Paper consultation process we have had to publish this Report without the answers to questions in paragraph 39 (paragraph 41).

(i)    We support strongly the creation of a system which would offer certainty over funding for nuclear clear-up, assist in long-term planning, and demonstrate the Government's commitment to the clean-up programme. We agree with those witnesses who suggested that a Segregated Fund would offer greater transparency to the funding process and might boost public confidence in the independence of the liabilities management system. (paragraph 42).

(j)    Whichever funding mechanism is adopted, the Government's annual contribution will be vital to the successful operation of the clean-up programme. It is essential that the Government ensure its contribution is sufficient to enable the LMA's objectives to be met, and to make good any shortfall created in the event that the LMA's commercial operations fail to deliver an operating surplus. (paragraph 43).

(k)    We welcome the flexibility in the proposed arrangements for operating the commercial assets, which should enable the Government to stop operations if they are making a loss, once existing contracts are honoured, or extend operations if they are making a profit and can continue to operate safely. (paragraph 44).

(l)    The Government's proposal to improve governance for the UKAEA Constabulary and to provide greater openness and transparency of its operations is to be welcomed. It is appropriate that it operates within the statutory framework of a modern police force. (paragraph 47).

  1. Several of the witnesses to our inquiry accepted the argument for greater separation between Nirex and the nuclear industry and some favoured independence. It seems to us that this would be achieved in large part once the LMA takes over the civil public sector nuclear liability and becomes by far the biggest customer for Nirex services. The development of a strategy for the long term management of radioactive waste will be central to the future work of the LMA and Nirex, and rapid progress on this is very important. The Government has promised that views will be invited on its proposals for such a strategy "in due course". In this case, "in due course" must mean "soon". (Paragraph 50).


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