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With regard to safetywe should bear in mind the fact that Sellafield is the largest construction site in Britain and one of the largest in Europethe current days-away case record rate is 0.23 against a target of 0.28, which is lower than any similar rate among any US contractors currently operating in that country. BNG Project Services has a days-away case record rate of zero and has worked almost 3 million man hours without a single lost-time accident. I could go on, but the point is made. The British nuclear industry places safety above everything else and it is a matter of fact that foreign contractors will have to emulate that safety
culture if they want to operate in Britain. We lead the world in that regard and others have a great deal to learn from us.
I cannot guess at the value of BNG in financial terms. However, when assessing the revenue of any potential sale, I ask that the Government consider more than the financial value of the sale. Value is measured in more than money and the highest bidder for BNG may not necessarily be the best bidder for my community. It is imperative that the highest financial bid should not bring with it the highest actual cost to my constituents or any part of the UK in the areas of safety, environmental performance and socio-economic investment and development. Public acceptability of a particular contractor must be considered in the process of any sale, and weight must be given to that in devising the criteria against which potential BNG purchasers are judged.
It must be said, one year after the establishment of the Nuclear Decommissioning Authority, that its presence in my constituency and West Cumbria generally has been enthusiastically received. It has proven already to be a genuinely involved, listening community partner, which has already demonstrated that it has the interests of the West Cumbria community uppermost in its thoughts and actions.
I thank my hon. Friend the Minister for the budgeting process of the NDA. I was concerned to discover in the US that the budget for nuclear clean-up is done on a year-by-year basis, so the budgets are set annually. They are therefore subject to the vagaries of the political processcut in some years and expanded in others. In the UK, my hon. Friend and the Department have provided a comprehensive, stable framework for nuclear decommissioning and clean-up to take place, and I am grateful for that.
I understand that the NDA will devise the BNG sale criteria, no doubt in conjunction with BNG, BNFL and the DTI. What I now require is significant involvement from the West Cumbrian community in determining what those criteria should be. The socio-economic obligations for both the NDA and its contractors are laid out in the Energy Act 2004, and I now hope to explore with the aforementioned groups the United States National Defence Authorisation Act 1993, especially section 3161, which helps to define the socio-economic obligations of US contractors operating in nuclear decommissioning environments. My hon. Friend will know of the importance of the West Cumbria Strategic Forum and I believe that it would be appropriate if that body were involved in establishing the sale criteria.
Finally, the future of British Nuclear Group is of fundamental importance to West Cumbria. It is vital that its sale be conducted properly, transparently and with the interests of those communities where BNG currently operates upheld at the centre of this process. The successful bidder must be the one who understands the ambitions and aspirations of its host communities and the working practices of the UK nuclear industry. I thank my hon. Friend for his patience and time, and look forward to his response.
Mr. David Drew (Stroud) (Lab/Co-op): I am grateful for the opportunity to speak in this debate, despite being late, and I apologise to my hon. Friend the Member for Copeland (Mr. Reed) for missing the first few minutes of his speech. I was taken by surprise, but I should have learned that about this place.
I wish to make three quick points. I represent a constituency at the other scale of things from my hon. Friend, in as much as the Berkeley site has been undergoing a fairly organised run-down for some months. The decision to dispense with the nuclear laboratories came as a bit of a shock, but it is pleasing to see that the work will go on. I welcomed the comments by my right hon. Friend the Prime Minister yesterday. In defending the nuclear industry, I have always sought to make the point that it is nothing if it is not its work force. That is the basic integrity of the industry. One can have sites and systems, but without the people, one has no industry. It is vital that we keep those people in place.
So my first point is that it is vital that we keep the presence of the industry in many different parts of the country. That is why I have always fought for Berkeley to be considered, if not as the site of a new nuclear power stationbecause of problems with the River Severnbut to retain the research and development facilities. I hope that my hon. Friend the Minister will say something about that.
Secondly, we have the issue of the ownership of the sites by the Nuclear Decommissioning Authority. Much as I can see the benefits of separating the providers of services from the ownership of the sites, there are some concerns about possible conflicts of interest. Given that Berkeley is the first decommissioned nuclear power station in this country, a proposal is imminent for the further decommissioning of the old power site, which would be a first in the world. I hope that my hon. Friend the Minister will accept an invitation when the proposal is introduced to come and see how it would take the nuclear industry forward, in terms of solving the waste problem and the issue of the new generation.
My third point is about the relationship of the BNG, whatever form it takes, and other parts of the nuclear industry. It is vital that we do not see contractualisation as the answer to everything. I am concerned that we have no overall picture of what the nuclear industry could look like in five years time. British Energy, BNFL, AMEC and the various other parts of the industry may have had their weaknesses, and the introduction of foreign investors may or may not be a good thing, but there needs to be clarity about the industrys structure. Without that, we will not be able to build the new generation of nuclear power stations, even if that is what we decide to do.
Finally, I totally concur with my hon. Friend the Member for Copeland that BNG is an important company that has been much abused in the past. I hope that my hon. Friend the Minister will give us some food for thought. and hope for the future.
I welcome the opportunity to comment on the future of the British Nuclear Group. My hon. Friend the Member for Copeland (Mr. Reed) is a great commentator on nuclear policy, and his expertise and experience are always worth listening to. In addition, he has a great reputation in his community, as I witnessed when I visited Sellafield some months ago.
The former Secretary of State, who is now Secretary of State for Education and Skills, announced our intentions in a written statement to the House on30 March. That statement made it clear that we had approved the BNFL boards recommendation that it should sell BNG through a competitive sale process commencing in April 2007 or earlier. However, there has been much media speculation about how the competitive sale will be conducted. Some of that speculation has been accurate and some of it less so, and my aim today is to provide some clarity on the matter.
I recognise that this debate takes place against a backdrop of some interest in the future of nuclear energy. I shall not say too much about that wider issue, save that I am conducting an energy review on behalf of my Secretary of State and the Prime Minister, and that it will report on these critical questions by the summer.
My hon. Friend the Member for Copeland rightly made some very positive comments about BNG and the Nuclear Decommissioning Authoritys achievements since it commenced operations just over a year ago. I should like to echo those sentiments. BNFL did an admirable job in restructuring itself and preparing the ground for the NDA. The management and staff at BNG have coped very well with the transition. I am tremendously encouraged that the NDAs stewardship of the UKs nuclear clean-up has already yielded significant efficiency savings at BNGs sites. It is a very good start, but of course we are looking for very much more.
That is why we believe that a competitive sale is the right route. After careful deliberation, the BNFL board determined a sale to be in the companys best commercial interest and to represent BNGs best chance of operating successfully in the commercial market created by the Energy Act 2004, thereby providing long-term stability for staff. Most important of all, though, the company also convinced us that it would be good for the taxpayer because it is good for the nuclear decommissioning and clean-up programme.
I shall be happy to discuss with my hon. Friend the reason why the option of a public-private partnership was not pursued, but essentially it was because BNG would not have the required critical mass.
The decision for Government was not straightforward, and was taken only after extensive consultation with key stakeholders. We were especially keen that the sale should not impact negatively on the NDAs mission, and we have moved forward carefully to ensure that we have fully considered the issues. However, I am absolutely confident that we now have the right result, and one that will contribute to improved clean-up performance for the NDA by introducing external expertise more quickly.
The NDAs competition timetable reflects its broader strategy to prioritise the tackling of the highest
hazards. Rather than run its own separate competition for Sellafield, the NDA was able to accommodate the sale by letting a new five-year contract for that site. That will commence next year, at the point when the new owner acquires BNG. The NDA and BNFL will thus work closely throughout the competitive sale process. The aim will be to ensure that the successful bidder is the best available to improve performance substantially, particularly at Sellafield. Therefore, the selection criteria will be focused mainly on issues such as safety, reducing high hazards, driving down costs through better planning and more innovation, accelerating clean-up and improved managed capability.
This debate is not the occasion to discuss the problems involved in nuclear decommissioning, but it is worth noting that they represent some of the really big challenges facing this country in the coming half century. Over the summer, the expert group CORUM will present a report with proposals on what might be called the final resting place for nuclear waste. Those are critical issues.
Mr. Drew: Does my hon. Friend agree that decommissioning represents a global rather than a purely national challenge? Increasingly, global relationships will have an impact on the nuclear industry. We have expertise in some areas, but will also have to borrow expertise from other parts of the world. Likewise, other countries will want our expertise in decommissioning.
Malcolm Wicks: I agree with my hon. Friend. The BNG sale enables us to assess the best bidders and to draw on their expertise, but he is right that Britain has great skills when it comes to nuclear energy. Indeed, we are very good at energy as a whole and we need to seize the chance to become one of the leading countries in nuclear power.
In assessing bids for BNG, the main emphasis will be on achieving value by making sustainable clean-up improvements in the longer term. We will keep in mind the fact that a sustained 10 per cent. efficiency improvement equates to a £200 million saving on the NDAs annual budget, which can be ploughed straight back into more work. Clearly, however, there is still some way to go and it is much too early to speculate about the commercial basis on which BNFL, working with the NDA, will organise the sale process.
It is expected that the competitive sale process will start in April 2007 with completion up to six months later. Details will be updated on the NDA and BNFL websites, but it is currently expected that pre-qualification will occur at the end of the summer. Before the new year, the new draft contract will be shared with pre-qualified bidders, the regulators and other stakeholders on a fully open and transparent basis.
The sale will comprise BNG and all its subsidiaries on an integrated basis: project services, Magnox and spent fuel services will all be included. Following a successful exit from its legacy contracts, BNG America, the US clean-up subsidiary, has already been sold with no continuing liabilities. Magnox has been included on the understanding that its inclusion does
not disrupt the Magnox competitions due to start in 2008, or possibly 2009. Given the short time gap between completion of the sale and the start of the competitions, the new owner of BNG will not be expected to make significant changes to the running of the Magnox stations during that period.
BNFL and the NDA have been maintaining a close dialogue with the unions and staff over proposals for BNG and that will continue, with the involvement of the Department as appropriate. I recognise that such fundamental change creates tremendous uncertainty for the work force, so I use this opportunity to reaffirm unequivocally that any BNFL employee whose employment is transferred to a private sector employer will receive the relevant pensions protections set out in the Energy Act 2004; or, where they do not apply, in the Cabinet Office statement of practice for staff transfers in the public sector.
The sale of BNG is entirely consistent with the BNFL strategy review held in 2003, which concluded that UK clean-up should be BNFLs priority. It envisaged that BNG would need to find partners to operate successfully in the new market being created by the NDA. The review also concluded that other parts of BNFL should be run for value and to minimise risk to the UK taxpayer. The sale of Westinghouse has already been announced. In addition, we are considering the future of BNFLs research and development arm, Nexia Solutions, and BNFL is exploring ways of realising value from its shareholding in Urenco.
Mr. Jamie Reed: An important issue came up in my broad-ranging discussions in the US last week with Ron Ault from the AFL-CIOthe US equivalent to the TUCwhen we were talking about companies that might have an interest in BNG and which could have a
direct impact on the lives of people in my community and those of my hon. Friends the Members for Stroud (Mr. Drew) and for Workington (Tony Cunningham). Mr. Ault said of one company that it would rather climb a tree than do a deal with labourmeaning the unionsand that, at any cost, it would pick a fight with the trade union movement at whichever site it was asked to operate. I shall not name the company, save to say that it has run into terrible difficulties at the Hanford vitrification plant. What is my hon. Friend the Ministers view on the relationship that American companies must have with UK working practices and UK working bodies and representatives on UK nuclear sites?
Malcolm Wicks: I have already paid tribute to the skills of our work force in the nuclear industry. Those skills need to be safeguarded and we need to think about the future when, as with other parts of the energy sectoroil and gasdemographic trends mean that the average age of workers is increasing. We need to attract new people to those industries. It is critically important that whoever takes over BNG has a proper understanding of what these days we call the human relations side of business. I should rather climb a tree myself than jeopardise those important relationships. In any case, such companies would have to contend with my hon. Friend, which would be a formidable challenge.
I hope I have provided clarity on the issues surrounding the BNG sale and the rationale for approving the boards decision. In summary, the Government have been persuaded that it is good for the company, its people, the NDA, decommissioning and, ultimately, the taxpayer. I thank my hon. Friend and other colleagues for their contributions to this short, early, but useful, debate.