Select Committee on Trade and Industry Appendices to the Minutes of Evidence


Memorandum by Friends of the Earth

 s1. sFriends of the Earth welcomes the Government's proposals to establish a Liabilities Management Authority to manage Britain's nuclear waste legacy. However, we are, and we believe the Committee should be, deeply alarmed that:

    — sthe Government is still unclear about the extent of the liabilities it, and the taxpayer are taking on;
    — sthe provisions set aside for liabilities management by BNFL are so inadequate to the task.
 sWe believe a National Audit Office investigation, and Public Accounts Committee inquiry are urgently needed into whether the DTI has satisfactorily discharged its responsibilities to the taxpayer in its oversight of BNFL operations in the last decade.

 s2. sThe bill for liabilities is currently estimated to be £48 billion and rising, of which BNFL's share is £40.5 billion. The funds available from BNFL, through the Nuclear Liabilities Investment Portfolio (NLIP), for managing these liabilities are only about £4 billion. Friends of the Earth accepts that the NLIP was never intended to cover all nuclear liabilities, and that previous commitments have been made by Government to cover liabilities from operations on behalf of the Ministry of Defence and for other liabilities arising from the Magnox reactors. However, the extent to which new, uncovered liabilities are being passed, in the White Paper, from BNFL to the Government is unclear.

 s3. sFriends of the Earth hasn't carried out a detailed examination of BNFL's reports and accounts. However, we have seen the report prepared by the independent analyst, Mike Sadnicki, on behalf of Nuala Ahern MEP. This is due to be published in the next two weeks and raises important questions about "anomalies and cases where BNFL's presentation of results can seriously mislead". In particular, and with reference to the establishment of the LMA, this suggests that BNFL has drawn money from the NLIP, and that the figure drawn exceeds the amount spent by BNFL on discharging liabilities. Mr. Sadnicki argues that: "These sums appear to constitute a subsidy from the NLIP to operations". Given that the NLIP represents the main source of funding from nuclear operations to the management of liabilities, it is important that the public be satisfied that BNFL has been managing the NLIP in the public's interest. This is not yet clear, and warrants a detailed investigation.

 s4. sOn a wider argument, Mr Sadnicki's report raises questions about whether BNFL's investments in the THORP reprocessing plant and the Sellafield MOX Plant will be profitable. In the case of the MOX plant, it seems incontrovertible that it will not. Furthermore, he raises questions about whether BNFL's purchases of Westinghouse and ABB also represent poor value for money. Given the scale of liabilities that seem to be being taken on by the Government, there seems to be a case for an investigation into whether the investments made by the state-owned BNFL were sensible.

 s5. sFinally, we are concerned by the recent joint report by the Radioactive Waste Management Advisory Committee (RWMAC) and Nuclear Safety Advisory Committee (NuSAC) which suggests that BNFL has made little progress toward conditioning, packaging and storing its backlog of intermediate level radioactive waste. It is imperative that the hazards identified by the Nuclear Installations Inspectorate in 1998 are urgently dealt with and the waste put in passively safe form. This hasn't been done and as a result will increase the eventual cost of clean-up. This, again, raises questions about whether BNFL has been acting with the public and the taxpayers' interest in mind and also warrants investigation. s6. sFriends of the Earth has contacted the National Audit Office (NAO) to ascertain the extent of its powers in respect of BNFL. We understand it has no powers to investigate BNFL itself, but does have powers to investigate and report upon the DTI's scrutiny of BNFL. The Government does intend it to have powers to investigate the proposed LMA. This is welcome, but might amount merely to "closing the door, after the horse has bolted". The real public need is for an investigation into the DTI's scrutiny of BNFL before the LMA is established. Friends of the Earth intends to write to the National Audit Office to make these points in the near future.

Roger Higman

Senior Campaigner (Climate and Transport)

Friends of the Earth Ltd.

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Prepared 12 August 2002