APPENDIX 15
Memorandum by Prospect
INTRODUCTION
1. Prospect is a trade union representing
105,000 scientific, technical, managerial and specialist staff
in the Civil Service and related bodies and major companies. In
the energy sector we represent scientists, engineers and other
professional specialist staff in nuclear and radioactive waste
management industries, and the wider electricity supply industry.
2. Our members are engaged in operational
and technical management, research and development and the establishment
and monitoring of safety standards, environmentally and in the
workplace. Within the UKAEA, Prospect and its predecessor unions
have taken the lead in representing employees from the Authority's
inception in 1954.
3. Our UKAEA members have strong feelings
about the impact of the NDA on the UKAEA's established work, the
increased responsibility in dealing with a further NDPB and the
possible break up of UKAEA as a national decommissioning organisation.
This submission reflects their concerns. It builds on the submission
we made to the Select Committee's inquiry into the NDA in February
2005. Whilst recognising that the position has progressed over
the last year, some of the concerns expressed in our previous
submission remain valid. These include the short length of contracts,
resource implications arising from frequent bidding exercises,
and the apparent low priority given to the NDA's socio-economic
responsibilities.
PREAMBLE
4. This response describes the effects on
UKAEA from being the UK's prime deliverer of a civil nuclear programme
to becoming a contractor to the NDA competing to decommission
its own sites.
BACKGROUND
5. The UKAEA was established under the 1954
Energy Act and took responsibility for Britain's nuclear programme,
both civil and military. Staff totals reached their peak at over
41,000 in 1961. Subsequently, major activities were divested or
transferred. These include The Radio Chemical Centre and British
Nuclear Fuels Limited in 1971 and transfer of military research
activities to the Atomic Weapons Research Establishment at MOD.
During the 1970s and 1980s UKAEA continued to lead the civil nuclear
research programme and the operation of a number of research and
demonstration reactors at Harwell, Winfrith, Windscale and Dounreay.
This came to an end in 1994 with the closure of the Prototype
Fast Reactor (PFR) at Dounreay.
6. UKAEA has substantial responsibilities
in fusion research operating the JET machine at Culham on behalf
of the European Fusion Development Association (EFDA) as well
as maintaining a UK programme. Some 300 staff are involved in
this activity.
7. UKAEA has always had responsibility for
its own pension scheme and its administration. Transferred staff
in the public sector as described above, eg BNFL remained in the
same scheme. Accordingly UKAEA has maintained and developed its
expertise in pension scheme matters. This highly successful operation
remains based in Thurso, Caithness.
8. UKAEA's commercial activities based on
the nuclear programme grew through the 1980s and 90s but Government
cuts in civil nuclear research led to the closure by 1994 of all
UKAEA's research programmes apart from the Fusion programme. This
led to a new focus on decommissioning and long-term management
of nuclear liabilities. UKAEA also has substantial property interests
at its sites. This is significant as these sites have been cleaned
up and returned to commercial use.
9. A major milestone in UKAEA's history
was the separation of its commercial businesses in 1996 and the
privatisation and flotation of AEA Technology. The further separation
of the UKAEA Constabulary in the 2004 Act leaves UKAEA in its
present form today.
THE POSITION
TODAY
10. UKAEA is a world-class player in fusion
research. The other main element of the UKAEA's core business
is nuclear cleanup, managing the environmental restoration of
Dounreay, Harwell, Windscale, and Winfrith civil nuclear research
sites. It claims to have set the pace in European decommissioning,
removing 15 reactors and dealing successfully and safely with
some of the nuclear industry's oldest and most complex facilities.
It also has expertise in property management and pensions administration
11. Accordingly, UKAEA is able to take credit
for significant achievement in the last ten years or so. Programme
accelerations of up to thirty-five years and savings in cost estimates
of some £1.5 billion from the cost of clean up from £6.3bn
to £4.8bn have been achieved. This adds up to a reduction
in nuclear liabilities of over 40% since 1994.
THE NDA REMIT
12. The NDA was created on 1 April 2005
via the 2004 Energy Act to provide the United Kingdom with wide
strategic focus on cleaning up nuclear sites. The NDA considers
this to be the biggest change in the structure of the nuclear
industry since the 1971 Atomic Energy Act. It operates on a budget
of about £2 billion per year. Its work involves the restoration
of all civil nuclear sites including those previously owned by
BNFL/Magnox. In its draft strategy it intends in 25 years to achieve
final site clearance at Harwell, Winfrith, Culham, Windscale and
Dounreay—subject to arrangements for high-level waste and
intermediate level waste being available. Its intended purpose
is to undertake this via competition. In its draft strategy, UKAEA
site competed contracts are proposed at Dounreay and Harwell/Winfrith
in 2008 and to combine Sellafield and Windscale together for competition
in 2010.
THE WHITE
PAPER PROPOSALS
13. The Government's 2003 White Paper proposals
"Managing the Nuclear Legacy—A Strategy for Action"
which led up to the Energy Act 2004, stated that the government
did not intend to change the ownership of UKAEA sites unless and
until there is a need to do so on the basis of UKAEA's performance.
It offered UKAEA the opportunity to demonstrate that it should
be the supplier of choice for the NDA. There has been a dramatic
change in policy since the government originally consulted parliament
and stakeholders on the basis of its White Paper.
14. In her letter to the trade unions of
13 February 2004 (placed in the libraries of both Houses), the
then Secretary of State for Trade and Industry, Patricia Hewitt
stated, "We have consistently set out the intention to compete
sites as and when the NDA believes there are real benefits to
be gained from doing so and it follows from this that there is
no preset timetable for sites to be competed." The White
Paper approach, which was to allow UKAEA to be given the opportunity
to be "supplier of choice", has subsequently changed.
UKAEA has continually been caught out by the DTI and then NDA
changing the competition rules; we argue without public or parliamentary
debate.
EFFECT ON
UKAEA
15. From 1 April 2005, while retaining ownership
of its sites (for now) UKAEA became under contract to the NDA.
It is at a crossroads where it has to prepare itself for a rigorous
and potentially destructive competition regime based on individual
sites or groups of sites. There is an issue in that the smaller
"southern" sites, especially Windscale and Winfrith,
do not have sufficient critical mass of expertise to meet the
criteria for site licenceability.
16. As it stood prior to 1 April 2005, UKAEA
was able to operate cross-site technology transfer as best practice.
Examples were remote handling, material test reactor decommissioning,
remediation of contaminated land and waste management issues.
It seems to us that, despite statements of good intention by the
NDA, it is not yet clear how sharing of best practice will be
achieved in a competitive environment.
17. The independent internal regulation
provided for all sites by UKAEA's central safety and assurance
division was seen to be vital from the NII's perspective. The
UKAEA was able to operate common planning, financial, business
information, management and safety environmental systems. The
transfer of Dragon fuel and Plutonium Contaminated Material (PCM)
from Winfrith to Harwell for storage represented a unique success
in UKAEA that allowed significant cost savings at Winfrith. Shared
central services such as safety and assurance, finance and commercial,
human resources and IT as well as communications provide the potential
of real cost increase on break up.
18. The effect, for example, of UKAEA losing
the ability to run its larger sites, eg Dounreay, is hard to quantify
but may be very very difficult for the organisation that remains.
Little consideration appears to have been given to this within
the NDA's strategy on the wider effect of its competition plan
on UKAEA as a fellow NDPB with its own responsibility to Parliament.
19. In order to deal with the effect of
the imposed competition regime UKAEA has had to undertake a very
substantial reorganisation and devolution of resources to competed
sites and to plan for its survival by other means. This has had
the potential to increase internal costs at the very time when
the NDA is seeking to prove itself by requiring substantial savings.
20. In order to respond effectively to this
changed situation the UKAEA has had to adapt to a survival plan
as an alternative to a "hold and fold" strategy. Given
NDA's ambitions it may be reasonable to assume that in future
UKAEA would not be selected to run all its existing sites at one
stage or another.
21. UKAEA therefore has embarked on a strategy
of meeting the challenge of worldwide competition. This includes
the announcement on 16 January 2006 that the UKAEA is to form
an alliance to target opportunities in the nuclear clean-up market.
This alliance incorporates UK and US companies AMEC plc and CH2M
Hill to compete both the UK and the international market for decommissioning.
Prospect supports this initiative as about the only means presently
available to keep UKAEA as a thriving entity still able to undertake
its remaining NDPB functions for the taxpayer. It also presents
further opportunities for the workforce as the UK decommissioning
programme winds down.
THE UKAEA/NDA RELATIONSHIP
22. The NDA/UKAEA relationship has not been
an easy one. From the outset tensions have existed between both
organisations. Given UKAEA's historic presence in the industry
since its inception 50 years ago and the `new boy on the block'
approach by NDA, this is not surprising.
23. It is disappointing, but perhaps symptomatic,
that in its first Annual Plan NDA gave no credit to the UKAEA
for the very substantial work already done by the UKAEA in decommissioning
its assets as described above.
24. The Annual Plan also refers to the nuclear
industry being perceived as secretive and leading to public mistrust
and lack of confidence. Given the excellent work undertaken by
UKAEA this comment is unfortunate and misleading. Its commitment
in working with the University of the Highlands and Islands and
Thurso College and its record of supporting local good causes,
together with the regard UKAEA is held in local communities upon
which it is based states the opposite. The world of nuclear R
& D 30-40 years ago is very different to the open way it now
operates. Historically the Official Secrets Act was held to apply
to many UKAEA activities.
25. It may be understood why there may be
some signs of resentment amongst senior and experienced UKAEA
colleagues simply to be referred to now as "the contractor"
by the NDA. Accordingly, it is not surprising that tensions have
arisen when a new NDPB is created largely to occupy the space
of another in a "dog and bone" relationship. Until this
inquiry, the implication of such juxtaposition appeared to be
lost in the transition from the White Paper to the Bill, the 2004
Act and the vesting of the NDA.
26. In addition to the savings in the decommissioning
programme that the UKAEA had already identified must be added
the cost of running the NDA itself. The NDA is remunerating its
employees (including those ex-UKAEA) significantly more than the
UKAEA was ever able to do. By offering high salaries and bonuses,
the NDA has been able to take experienced and knowledgeable staff
from the existing nuclear operators and the regulators at some
disadvantage to these organisations.
27. In undertaking a complex decommissioning
programme dismantling the UK's earliest and most complex experimental
reactors, mistakes are possible. In 1998, over-reliance on agency
management and contracting out of services led to a series of
problems at Dounreay that led to the NII undertaking a safety
audit. More recently, an accident at a Dounreay active handling
plant led to a cessation of operations there whilst the matter
is being investigated rectified and remediated. Such circumstances,
if repeated, are bound to place UKAEA, as an NDPB undertaking
nuclear operations, at a disadvantage with its sister NDPB, the
NDA which as client acts as a judge of the other's effectiveness.
We consider that UKAEA must be credited in having real experience
in dealing operationally with the effects of error and dealing
with it effectively as in the close out of the Dounreay audit.
This exhibits a vital strength and experience and not the reverse.
28. The latest energy review announced by
the government is expected to report by summer 2006. This is to
consider the possibility of new construction of nuclear power
reactors to replace those being decommissioned. The NDA appears
to be excluded from the sphere of further nuclear generation.
Accordingly, if it is so decided, we consider that the UKAEA should
be given the task (via its NDPB status) of advising and managing
for the government a national fission R & D programme. This
would neatly round off its original objectives as set out in the
1954 Act. Furthermore such an activity can be given an international
dimension given the expansion of nuclear power in other states;
China is an example.
29. It can be argued that as the DTI already
had an NDPB, highly successful as a contractor operator and experienced
in dealing with the civil nuclear decommissioning programme, why
did it need another?
CONCLUSION
30. Much though our UKAEA members may wish
to argue to the contrary, it would be unrealistic to expect that
the outcome of this Trade and Industry inquiry will result in
a complete turn around in approach by the government in competing
civil nuclear sites for decommissioning.
31. Much greater recognition is due to UKAEA
and its staff in the way that they have risen to the challenge
set by the NDA in having to report plans and objectives in detail
to a new third party and not as hitherto, and still get on with
the day job of decommissioning sites, running the fusion programme,
operating the pension scheme and other activities.
32. The UKAEA's ambition now, via its commercial
partners, is to bid for work at all 20 British civil nuclear plants
as well as internationally. It has not taken the competition route
by choice but finds itself in a position where it has to participate
to survive.
33. This represents a complex relationship
with the NDA that is not yet clear. As UKAEA stands now we consider
that as a fellow NDPB the NDA should operate as a far more equal
partner to UKAEA in the task to be undertaken ahead. The White
Paper presented a much more logical model. The UKAEA with its
proven track record and experience of dealing with contractors
is fully capable of being adopted as a yardstick standard by which
others may be judged. In other words a relationship much stronger
than the current contractor/client relationship must be developed
so that the country as a whole can take advantage fully of UKAEA's
expertise developed over 50 years. UKAEA's vision of being safe,
secure, and environmentally responsible, and to develop a cost-effective
decommissioning programme is identical to that of the NDA.
34. Being outside the NDA's remit, if it
is decided to go ahead with a new generation of nuclear fission
power stations, the UKAEA will be uniquely qualified to advise
the government on the practicalities of the adoption of such a
programme. This would be a befitting recognition of its inception
as set out in the 1954 Atomic Energy Act.
35. Given the rapid pace towards the current
NDA objectives Prospect considers this Select Committee inquiry
a timely and possibly last opportunity to present the government
with advice to safeguard the UKAEA and all it has built up in
the last 50 years.
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