Energy Bill

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Clause 42

Approval of a programme
Charles Hendry: I beg to move amendment No. 31, in clause 42, page 38, line 7, at end insert—
‘(d) Nuclear Decommissioning Authority,
(e) relevant local authority.’.
The Chairman: With this it will be convenient to discuss the following amendments: No. 41, in clause 42, page 38, line 7, at end insert—
‘(d) the Nuclear Liabilities Financing Assurance Board (NLFAB).’.
No. 32, in clause 42, page 38, line 14, at end insert—
‘(d) relevant local authority.’.
No. 33, in clause 45, page 39, line 32, at end insert—
‘(d) relevant local authority.’.
No. 42, in clause 46, page 40, line 13, at end insert—
‘(d) the Nuclear Liabilities Financing Assurance Board (NLFAB).’.
No. 34, in clause 50, page 44, line 10, at end insert—
‘(d) the Committee on Radioactive Waste Management,
(e) the Nuclear Decommissioning Authority,
(f) the relevant local authorities.’.
No. 43, in clause 50, page 44, line 10, at end insert—
‘(d) the Nuclear Liabilities Financing Assurance Board (NLFAB).’.
No. 40, in clause 51, page 44, line 29, at end insert—
‘(3) Regulations may establish a Nuclear Liabilities Financing Assurance Board (NLFAB) to provide independent scrutiny and advice on the development, approval, implementation, modification and maintenance of funded programmes for the designated technical matters mentioned in section 41(5).
(4) The NLFAB shall—
(a) be appointed by the Secretary of State;
(b) report to Parliament annually on the implementation of all funding of designated technical matters as specified in approved funded programmes;
(c) review all programmes on a five year cycle, including coverage of all designated technical matters specified in approved funded programmes, estimates for costs for all matters under section 41(5) and of security provided in connection with those costs;
(d) give advice on alternative arrangements where designated technical matters are not specified in an approved funded programme.’.
No. 44, in clause 59, page 47, line 30, at end insert—
‘(d) the Nuclear Liabilities Financing Assurance Board (NLFAB).’.
Charles Hendry: We have had an extremely constructive and helpful debate on the preceding clause, and can probably move through this group of amendments with greater speed. They relate to the matter of whom should be consulted in the section where a change or modification is being proposed. Clause 42(5) says:
“Before deciding whether to approve or reject a programme, the Secretary of State must consult each interested body about—
(a) the programme, and
(b) any modification which it is proposed to make, or any condition it is proposed to impose,
so far as it relates to a function conferred on the interested body by or under an enactment.”
Subsection (6) sets out which organisations are considered interested bodies. It mentions the Health and Safety Executive, as well as
“(b) in relation to a funded decommissioning programme for a site in England and Wales, the Environment Agency, and
(c) in relation to a funded decommissioning programme for a site in Northern Ireland, the Department of the Environment for Northern Ireland.”
Amendment No. 31 proposes that the Nuclear Decommissioning Authority and the relevant local authority be added to the list.
My understanding is that reference to the Secretary of State in the Bill does not specifically include bodies that report to him, such as the NDA, and it would therefore seem sensible to include a specific reference, although the Minister dealt in an earlier answer with the roles of the NDA in relation to these activities. It would also seem good practice for the local authority to be consulted about proposed changes. That is also the purpose of amendment No. 32, which would require the relevant local authority to be consulted before the Secretary of State approved a programme with proposed modifications or conditions.
Amendment No. 33 makes similar changes to clause 45, and would include the relevant local authority in the list of organisations invited to make written representations about a proposal to modify a decommissioning programme. I think it is important to include the local authority, as these changes could have very significant local implications, particularly, for example, to transport given the number of lorry movements if more has to be moved off-site. The local authority should be given the opportunity to highlight such impacts in a formal submission before final decisions are made.
Amendment No. 34 relates to clause 50, and would add other organisations to be consulted in this process, including CoRWM, the NDA and the relevant local authorities. These are probing amendments and some of the bodies mentioned may be included in other ways, but it seems sensible to have clarity about exactly who will be consulted and under what circumstances.
Mr. Binley: I rise to support my hon. Friend on this vital issue. He spoke in an earlier debate of the way in which other countries have tried and succeeded to get local support behind a given proposal. That exercise will be vital, not only in the creation of new nuclear power stations, but in the whole decommissioning process. We all know the type of lurid stories with no foundation in fact that can easily gain credence at local level and rip through the general populace like wildfire. They do immense harm before even the process has begun. We must be aware of that kind of local feeling and the damage that it can do to a programme of this kind. I fully support such programmes.
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I will make a few points about the amendments. The local population will be consulted as part of the planning process. I know that the planning decisions will be taken elsewhere, but it is right to say that those decisions require, by law, a local consultation. I am always fearful of consultations specifically about planning. Anyone who has been in local government carries that fear with them for the rest of their career. Certainly, I have been scarred on a number of occasions by such operations. I want a more balanced view to be included in the whole consultation process.
My second point is to ask, if the Minister is minded to believe that local consultation is vital in a sense wider than merely the planning process, the level at which it will take place. It seems that the regional assemblies have been knocked on the head, to use a Northamptonshire phrase, and I wonder where that leaves us with regard to local consultation.
My third point relates to the geographical areas where quangos now control the planning process. A number of areas are designated, under the sustainable communities project, in which planning decisions are taken away from the local authority. I am concerned that we should have a proper debate that covers the planning process, as I am particularly concerned that that process does not include elected representative bodies. Bearing in mind that some of the sites might be in those areas, we must have a proper ability to talk at local level, which we might not get if we are consulting only on planning matters. I ask the Minister to consider that point as part of the appeal for a wider local consultation.
My final point is about time frames. I and many others here have suffered the difficulties of the Post Office consultation, although I do not wish to draw the Minister into that debate other than to say that many people in my area felt that the consultation was not well done. In fact, they felt that it was badly done. In the case of my constituency, the announcement of closures was made at the end of December but the Christmas holiday had not been taken fully into account. As we know, we now have a two-week holiday at Christmas, but the official period is sizeably smaller. Indeed, a six-week period itself simply was not long enough.
Given that there will be some form of local consultation through the planning process, I ask the Minister to give us an idea as to whether he might consider the matter again, with a more holistic view of consultation. My constituents and many others, I am sure, will want reassurance on the matter.
Martin Horwood: I warm more and more to the hon. Member for Northampton, South. I am not sure that we agree on many things, but I agree with him absolutely on the “quangofication” of planning, where there now seems to be a regime under which Government inspectors descend from on high to deliver judgment on the future of local communities.
Mr. Swire: Will the hon. Gentleman give way?
Martin Horwood: The examination in public on the south-west regional spatial strategy is my least favourite current example.
Mr. Swire: Those are welcome words from the hon. Gentleman. Do they mean that it is Liberal Democrat official policy to do away with unelected regional assemblies?
The Chairman: Order. I hope that the hon. Gentleman will not be tempted to respond.
Martin Horwood: If you will permit me to say, Mr. Amess, that I have never been in favour of unelected regional assemblies and would therefore agree with the hon. Gentleman. You are right to say, however, that we are straying from the point.
The thrust of comments from Conservative Members is that local authorities should be statutory consultees in the process and that is a laudable aim. I welcome these amendments. We seek in amendment No. 40 to add another body that is strangely absent from the Bill, namely the proposed nuclear liabilities financing assurance board. We have already explored at some length the intricacies and the debates to be had over the funded decommissioning programmes. This new board is supposed to provide, according to the White Paper, independent
“scrutiny and advice on the suitability of decommissioning programmes”
submitted by operators of new nuclear power stations. It is therefore a critical body in the whole infrastructure of financing and decommissioning programmes that this Bill seeks to create. It is a mystery to me why this important body is not included on the face of the Bill. The problem of not having it in the Bill is that it misses out on the consultation rights that are extended—we now propose to give them to local authorities as well—already to the Health and Safety Executive, to the Environment Agency and to devolved bodies. The fear is that that means that the NLFAB will only be a purely “advisory body”. That is the phrase used in the White Paper and the risk is that it will be a watchdog with no teeth.
The Minister is obviously a man of enormous integrity who has no intention of allowing the nuclear industry to be subsidised by the taxpayer. We do not know, however, who the future Energy Minister will be. Who knows who will be among his successors? Our amendment would ensure that, whoever is Energy Minister in the future, is held to the same high standards expounded by the current Minister. The NLFAB should therefore be included in the Bill in a more robust and explicit way with specific statutory rights. These would apply, for instance, before the Secretary of State decides to approve or reject a programme; before the Secretary of State can make regulations to disapply decommissioning plans or formal procedure for modification of funded decommissioning plans under particular circumstances; and before making regulations about the preparation, content and implementation of funded decommissioning programmes. This seems to us to be simply a way of joining up the Government’s current intentions. If the Minister really supports the policy that is expounded in the energy White Paper, he should have no objection to this amendment.
Malcolm Wicks: We have a number of amendments before us and my speech, following a long debate, will therefore by slightly longer than I would wish, as some important issues have been raised. I will not stray into the very clever and ambitious campaign to save Northampton sub-post offices. This is one of the most unlikely settings for that campaign and I respect the position taken by the hon. Member for Northampton, South. Nor will I talk about the south-west regional spatial strategy, although I look forward to an opportunity to discuss that.
To help hon. Members understand why the NDA, the Committee on Radioactive Waste Management, the nuclear liabilities financing assurance board and the relevant local authorities do not have specific responsibilities in the Bill, I thought it would be helpful to describe briefly the functions of the NDA and CoRWM, the rationale and intended remit of the NLFAB and the role that local authorities might play in taking new build forward.
As well as being responsible for decommissioning existing power stations and dealing with the issue of legacy waste, the NDA is responsible for developing and maintaining a national strategy for handling low-level waste for nuclear sites. It is also responsible for ensuring the continued provision of any required waste management and disposal facility. The NDA is also responsible for carrying out a UK-wide review of interim waste storage and will consider what may additionally be required to fulfil the Government’s commitment to ensure robust interim storage of nuclear materials until such time as the geological disposal facility is available.
The NDA’s work is relevant to new build in relation to taking forward the geological disposal facility. The NDA is providing input into the cost-modelling work that will be carried out to enable the Government to set a prudent fixed unit price for the disposal of new build waste and spent fuel in the geological facility. The NDA will also play a role in providing advice and in sharing its expertise in waste management and decommissioning with potential new build operators. This advice is likely to be important for operators when they are preparing their funded decommissioning programmes. It will be for the operators to seek this advice from the NDA. As the NDA is a non-departmental public body of which my Department has oversight, we do not believe there is a requirement for the NDA to have a specific function in the Bill.
Amendment No. 34 proposes that when the Secretary of State seeks to make regulations or publish guidance under clause 50, he should consult CoRWM, the NDA and other local authorities. Clause 50 is an important part of our framework as it enables the Secretary of State to make regulations and publish guidance about the content, modification and implementation of funded decommissioning programmes. The regulations and guidance in relation to programmes have no impact on local authorities and the scrutiny of programmes is best placed under the auspices of the NLFAB, so I believe that local authorities need not be statutory consultees.
CoRWM’s role is also outside the scope of this Bill. The role of the reconstituted committee is to provide independent advice to Government on the long-term management, including storage and disposal, of radioactive waste. CoRWM’s priority task will be to provide independent scrutiny of the Government’s proposals, plans and programmes to deliver the geological repository as the long-term management option for the UK’s higher activity waste. It does not have a role in relation to the funding of decommissioning and waste management, which is what we are talking about today primarily.
On the proposed NLFAB, in the nuclear White Paper we gave a commitment to set up an advisory body to provide independent scrutiny and advice on the suitability of the decommissioning programmes submitted by operators of new nuclear power stations. We also indicated that it would also provide advice to the Secretary of State on the regular reviews and ongoing scrutiny of funding arrangements. The board is designed to address both public and industry concerns about the scrutiny of funded decommissioning programmes.
Responses to last year’s consultation on the future of nuclear power demonstrated that there was some public concern over the ability of Government to ensure that operators of new nuclear power stations pay their full decommissioning costs and full share of waste management costs. The board is intended to alleviate this concern by publicly issuing advice on the suitability of all funded decommissioning programmes that are submitted to the Secretary of State for his approval. At the same time, representatives from both the nuclear and financial industries have expressed concern over the role of the Secretary of State and about how to ensure that he has access to the necessary expertise to assist in approving the funded decommissioning programmes.
To ensure that there is thorough, comprehensive and consistent scrutiny of programmes the board will be composed of a broad range experts, including, we expect, fund managers, financial experts, nuclear technicians and economists. As we set out in the nuclear White Paper, we expect that the Secretary of State will draw on the advice of that board before approving a programme. It is envisaged that the board will consist of high-calibre people, employed part-time, meeting periodically as and when programmes are submitted for scrutiny and for regular reviews of funds when these have been set up.
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Amendment No. 40 proposes that the Secretary of State should have the power to make the board a statutory body through regulations. I am glad that hon. Members recognise the importance of the board in tabling the amendment. However, the amendment is not necessary.
Mr. Swire: Will the Secretary of State or the Minister have control of appointments to that board? What process will be used for appointing board members? What remuneration will they receive? Will there be geographic representation on the board to represent areas likely to be used for processing, decommissioning or storing nuclear waste?
Malcolm Wicks: The board will be set up according to the now well-known Nolan principles. It will not just be the Minister or someone else having their own ideas about who might be helpful; it will go through the Nolan process. I do not think that a geographical spread is necessary per se, but I will bear in mind the hon. Gentleman’s concern. Clearly, we do not want everyone coming from the same borough in London, so it might be a point that we should bear in mind, but I do not think that it will be a primary concern. The expertise that I have mentioned—nuclear expertise and an interest in funding—is the kind that we are looking for.
The form of the board is more suited to an advisory NDPB than a statutory body. I am convinced that the required advice can be provided without establishing a full regulatory body. The board will be providing advice on a small number of programmes. I do not believe that a full statutory body would offer the taxpayer the best value for money, given the amount of work that it might expect to do and the fact that it would be providing a high level of scrutiny on an ad hoc rather than a full-time basis.
All parties’ interests are in having an independent body. Operators will want to ensure that the body applies its judgment in an open and consistent way. Likewise, those concerned about new nuclear will want to ensure that the framework is best applied in a rigorous and transparent manner. It is our intention to make the reports produced by the NLFAB publicly available, so I am sure that those involved with the board will want to ensure that their advice is rigorous and independent. An example of an effective advisory NDPB in the nuclear policy field is the previously mentioned Committee on Radioactive Waste Management—CoRWM. It has proven effective in providing independent advice to the Government. The work that CoRWM has done and, no doubt, will continue to do shows that a body independent of Parliament can provide the level of scrutiny advice needed. It is that precedent that forms the basis for our proposal to create the new board.
As an advisory and not a decision-making body, I do not believe that the NLFAB should be subject to parliamentary scrutiny. The board will be advising on whether a programme is robust enough to achieve its objectives within a framework set by the Government. The framework that we are putting in place will create the parameters in which operators will have to work and it is those parameters that should be scrutinised by Parliament, together with regulations made by Parliament. It is not for Parliament to directly scrutinise that way in which operators implement their programmes within the framework. After all, they are private companies. Such scrutiny is the responsibility of the Secretary of State assisted by the relevant parties. The board will advise on the exercise of functions by the Government, in particular the Secretary of State’s decision whether to approve a programme, not on the exercise of functions by Parliament.
As for the input that local councils should have in the matter that I set out earlier, it is important to understand the role that they have played in the past in the development of nuclear power stations and the role that the Government envisage local councils playing in the development of new nuclear. In the past, the planning process for nuclear power stations and other large-scale energy projects has been inefficient, costly and lengthy. In some cases, it may not have provided sufficient opportunity for the consideration of local issues because the process has focused largely on dealing with broader national issues, for example.
The Planning Bill proposes a new consent regime for nationally significant infrastructure projects and the Government will produce national policy statements that establish the national case for infrastructure development and set the policy framework to be used by the new infrastructure planning commission. National policy statements will be subject to public consultation and the Planning Bill sets out the procedures for producing them. Decisions on applications will be made by the IPC, which will manage inquiries and take decisions on applications for nationally significant infrastructure projects, including proposed nuclear power stations. The relevant local authorities will have an opportunity to comment on specific matters relating to the proposal to build a nuclear power station.
The new IPC process will focus on specific local aspects of the application rather than the national need for the proposal. That will include discussion and consideration of the impact that a power station might have on the local community. It is only right that once a new nuclear power station is proposed, local authorities should have a say in its development. We believe that it is during the planning process that local authorities should have a formal role, not during the consideration of a funded decommissioning process.
Charles Hendry: The clause does not relate to the process for approving nuclear power stations, but proposes the decommissioning package. The amendment on local authority involvement relates to approving a programme with modifications or conditions. Is the Minister saying that a local authority could simply discover that the Secretary of State had announced modifications or conditions without consulting it or letting it have any input?
It could be decided, for example, that rather than storing a mound of spoil on site, it will be removed and disposed of elsewhere. In such circumstances, there will be significant pressures on the local infrastructure. Surely the local authority would be consulted. That is why we are suggesting that the local authority should be a statutory consultee on modifications and changes.
Malcolm Wicks: Let me continue and see if I can satisfy the hon. Gentleman. I believe that it would be wrong for local authorities to comment on the contents of funded decommissioning programmes. Local authorities will quite rightly be concerned with the safe operation of the power station, but the detailed financial considerations that these clauses cover is quite a different matter.
I am aware that the operators of existing nuclear power stations go to great lengths to engage with local authorities and communities on matters that affect them. While I cannot speak for the future, I imagine that new operators will continue that process and engage local authorities on local issues concerning new nuclear power stations. Nevertheless, I will reflect on what the hon. Member for Wealden has said to ensure—not meaning it rudely—that there is not a substantive issue that I need to address. I will take further advice on this issue.
Anne Main (St. Albans) (Con): I am intrigued by the Minister’s statement about nuclear operators liaising with communities and local authorities. Given the ongoing legacy that some of these depositories may create for a community, what are the Minister’s views on education and ongoing engagement with such communities? He felt reassured, having seen a depository in operation. How is education for the local communities that are expected to take these depositories factored into the equation?
Malcolm Wicks: On visiting one or two nuclear installations in the UK and the one that I have mentioned in Finland, I have been impressed with the links to local schools and communities. Nuclear power stations seem to have very good connections with local communities. That should hardly be a surprise, because they are often a major employer in the community and have large, skilled work forces that may include members of the local council. I have heard a great deal about outreach in education; enabling school children to come in and so on. I have no reason to believe that that will not continue. It is in the interests of those companies to enable children and their parents to learn more about new nuclear—they will provide part of a future work force. I have been impressed by what I have seen already. I am sure that that will continue.
Mr. Binley: I thank the Minister for his generosity. He has been immensely kind. May I delve more deeply into the issue of quango planning authorities, which are gaining some precedence throughout the nation, particularly in my part of the world? They report to a regional body, which is chaired by a Minister. They are seen as part of the machinery of government. There is some concern about the impression that the Government do not want local involvement. It is eminently sensible for the Government to be seen to be wanting local involvement and for the local voice to be heard properly and fully. Will the Minister comment particularly on the question of those supra-local planning authorities, which have been set up recently and the credibility of which seems to have been growing in government circles?
Malcolm Wicks: I will not venture too far down that path, because I could trespass into other territory, which our vigilant Chairman might well rule out of order.
To reiterate, when there is a proposal for a power station, which will now come under the auspices of the new IPC, it is right and proper that local people, groups and authorities have the opportunity to comment on local issues. That will continue to happen. It is generally appropriate for the power station to have good links with the local community, which was the burden of the question of the hon. Member for St. Albans. The point that I am still puzzling about is that made by the shadow Minister, which he may want to come back on, so that I get it fully. If, as part of a change to the decommissioning plan, something might legitimately affect the local community—I am not sure what that might be—should the local authority have any involvement? I would like to tease the issue out a bit more with the hon. Gentleman.
Charles Hendry: I am not sure whether this is an intervention or a speech, nor how long I am allowed to speak. My concern was that the Minister put the emphasis on “funded” decommissioning programme. It is not so much the financing of that package, which I totally understand is not a matter for the local authority, but any change or modification to the decommissioning programme itself. In some circumstances, that would not have an impact beyond the site where it was happening, but in some cases it is possible that there would be an impact on a local community. I particularly mentioned the transport infrastructure. A modification may involve a great deal of movement of material off site or other changes of that nature. Clearly, on some occasions it would be appropriate to involve the local authority in the process. Local authorities ought to have the right to be involved as a statutory consultee, rather than simply discovering that a modification has been put through by the Secretary of State, on which it had no chance to comment.
Malcolm Wicks: That is a perfectly reasonable question—I do not always follow my lines to take. I would like, with the approval of the hon. Gentleman and the Committee, to take some time outside the Committee to reflect and to see whether there is a substantive issue here that we need to address.
Charles Hendry: I am grateful for the Minister’s reasonable and thoughtful approach. Clearly, it is not appropriate to include the references to the NDA, as we did in the amendment. Also, I understand why CoRWM would be dealt with separately. I am grateful for his offer to reflect further on the subject and happy to have further conversations about it. We might return to the issue on Report. In the light of those assurances, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
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The Chairman: The debate has obviously been wide-ranging, so there will not be a separate stand part debate.
Martin Horwood: On a point of order, Mr. Amess, I would like the opportunity to move amendment No. 40, which is in the group, if that is possible.
The Chairman: That is perfectly in order. I wondered whether the hon. Gentleman wanted a Division on amendment No. 40. We are now coming to amendment No. 45. The hon. Gentleman can move amendment No. 40, but at a later stage.
Martin Horwood: On a point of order, Mr. Amess, I understand totally why you do not want to have a clause stand part debate, but I have a couple of questions that would help us to understand the detail of the clause, so is it appropriate to ask them?
The Chairman: The hon. Gentleman is entirely right, and I suppose that I should have made it clearer. We are now going to debate amendment No. 45, and it will be entirely appropriate for him, and perhaps others, to raise points in the debate.
Martin Horwood: I beg to move amendment No. 45, in clause 42, page 38, line 21, at end add—
‘(11) The Secretary of State must not approve a funded decommissioning programme if it includes any proposal to limit the liabilities of the operator, or a body corporate associated with the person who submitted the programme, should cost estimates change.’.
I am not sure whether this ought to be a point of order, but I hope to reply to some of the points that were made in the debate on the group including amendment No. 40. I was grateful for the Minister’s welcome for amendment No. 31, which was tabled by the Conservatives, and the associated amendments, and I welcome his agreement to reflect on those. I was much less reassured by his comments on our amendments, and we will therefore press them to a vote when the moment arises.
Amendment No. 45 was initially something of a probing amendment to explore the impact of the long-term variability of the costs of decommissioning programmes and the impact that that would have on the original base case calculations. We have explored that issue on a number of occasions, so I shall keep my comments on the amendment relatively brief. The focus is on the challenge of accurately forecasting the costs of decommissioning and how we adjust what starts as the base case to take account of variable costs. The Minister mentioned Finland as an example of an attempt to calculate those, but the Finnish example is a good one because the costs are overrunning spectacularly, as is the time scale. Hon. Members have pointed out the technical difficulties of looking at the costs of what might be a dying industry if no other Governments join us in the rush towards new nuclear. In the White Paper, the Government said that they planned
“to use the exercise on waste cost modelling to set a fixed price or upper limit for nuclear operators. This price would be set at a high level, including a material risk premium over and above expected costs.”
The Minister has already referred to the risk premium mechanism, so the amendment simply seeks to join up different parts of the Bill and make it absolutely clear that the Secretary of State would not approve a funded decommissioning programme if it included any proposal to limit the liabilities of the operator or a body corporate associated with the person who submitted the programme should cost estimates change. If that is the Minster’s intent, as he has repeatedly suggested in our discussions, I once again see no reason why the Government should object to the amendment.
Charles Hendry: The hon. Gentleman has raised some interesting points, and I look forward to the Minister’s clarification. I wonder whether the Minister might also take account of a couple of more general issues. Subsection (8) states that the Secretary of State cannot
“reject a programme without informing the site operator of the reasons for doing so.”
How will that be done—by means of a meeting or a letter? What will the process be? Specifically, will it be made public and will there be a right of appeal against that decision?
Clause 42(9) says that the Secretary of State must act “without unreasonable delay”. That is vague terminology. We could be looking at a nuclear programme that goes back 15 years. Is there a legal definition of “unreasonable delay”? Greater clarity is required.
Malcolm Wicks: I thank the hon. Member for Cheltenham for moving the amendment and I thank the hon. Member for Wealden for asking two questions. I will try to reply without unreasonable delay, but I will not define what I mean by that at this precise moment.
It is helpful to discuss the amendment in the context of the clause. To clarify, clause 42 allows the Secretary of State to approve, approve with conditions or modifications, or reject a funded decommissioning programme. In approving the programme either with or without modifications, unconditionally or subject to conditions, the Secretary of State is required to ensure that prudent provision is made for technical matters and for the financing of designated technical matters that are set out in the programme. In determining whether to approve the programme, the Secretary of State would have regard to the factors set out in guidance published under clause 50(6). That guidance will help operators to understand more fully what issues the Government expect to be covered in a funded decommissioning programme if it is to be approved.
Before approving a programme, the Secretary of State is required to consult with the Health and Safety Executive, the Environment Agency in England and Wales, and the Department of the Environment for Northern Ireland. Those are known as interested bodies and, if I may, I will refer to them in that way for the purpose of the debate. The purpose of consulting with the interested bodies is to ensure that the technical plans submitted to the Secretary of State conform to the safety and environmental requirements of the relevant regulatory body. The Secretary of State can, if necessary, require a modification to a programme that has been submitted for approval, or impose a condition on it. The clause requires that, before imposing that modification or condition, the Secretary of State give any person who would be subject to the proposed modification or condition an opportunity to make written representations about it. That will give those persons affected the opportunity to comment on the proposal and, where necessary, put their case as to why the proposed modification or condition should or should not be made.
Although the Bill does not require it, the Secretary of State would consider any written representation received. By placing the Secretary of State under a duty to allow operators and others to make written representations, it is implicit that the Secretary of State should have regard to representations made when taking his decision. The Secretary of State cannot reject a programme without informing the site operator of the reasons for doing so. To reduce uncertainty, the Secretary of State must make a decision whether to approve a programme “without unreasonable delay”. We might come on to that point.
Anne Main: The Minister mentions representations from interested parties with regard to accepting a proposal. Does he allow negative representations or only those that are in support of a proposal?
Malcolm Wicks: I shall return to that important question in due course, if I may.
The amendment seeks to prevent the Secretary of State from approving a plan which limits an operator’s liability under a funded decommissioning programme, in the case of rises in cost estimates. I will set out our overall policy approach on those issues, and on the basis of that I will go on to explain why the proposed amendment is unnecessary and would not be compatible with our overall approach.
We have made it clear that it is our policy that owners and operators of new nuclear power stations must cover the full costs of decommissioning and their full share of waste management and disposal costs. In the draft guidance on funded decommissioning programmes, we state that operators will be expected to reassess periodically their estimates of costs, and ensure that any increases are factored into an increase in the target amount of moneys that they will accumulate in their fund. Operators’ estimates of costs will be subject to scrutiny from a number of sources, including from those responsible for the independent fund and from the new independent advisory board, the NLFAB. The operator will be responsible for making good any shortfall or risk of shortfall in the accumulated funds held by the fund identified by the various elements of scrutiny.
In the nuclear White Paper we set out our intention to set a fixed unit price to operators for the disposal of intermediate-level waste and spent fuel. The fixed unit price will give operators certainty on their costs to enable them to take investment decisions and to seek financing. But we will not set this price at the expense of the taxpayer. It is worth emphasising that the fixed unit price relates only to the disposal of intermediate-level waste and spent fuel. I sought to clarify that point earlier. It does not relate to the costs of decommissioning or other waste management costs such as the management and disposal of low-level waste.
It is right and proper that the Government should bear the risk of building a geological disposal facility, as we would need to do this to dispose of our legacy of waste, regardless of the position on new build. As it is both desirable and technically possible to dispose of new-build waste in the same facility as legacy waste, new-build operators will have no influence over the project to deliver the geological disposal facility. It is therefore right that they should not bear open-ended risks in the event that there are cost overruns on the project.
Steve Webb: I just want to get a feel for scale. One of my problems with the Bill is that, although I understand the concept of a risk premium and a cost, as an economist I like to know how many zeros there are on the end of any number. So may I ask the Minister one of my “how many zeros” questions? In a typical new nuclear plant, how many noughts would there be in the typical costs that came under the scope of one of these funded decommissioning plans? Would the risk premium be double? Would there be a 100 or a 10 per cent. margin? What scale are we talking about?
Malcolm Wicks: There are quite a few noughts, but I shall be even more specific as we progress. How specific we shall have to wait and see. It cannot be a definitive number.
It is equally right and proper that operators should pay for the certainty that they will get over the costs of the disposal of their intermediate-level waste and spent fuel. The fixed unit price will be set at a level over and above expected costs and will include a significant risk premium. I think that that is what prompted the hon. Gentleman’s question. The fixed unit price that the Government will set for operators of new nuclear power stations for disposing of their intermediate-level waste and spent fuel will be based on an estimate of the costs of disposing of these materials in a geological disposal facility. It will be fixed at the outset and will not be subject to change, although it will be escalated over time, in line with predetermined factors such as inflation.
The fixed unit price will include the following items: estimates of the cost of disposing of intermediate-level waste in a geological disposal facility, including a contribution to the fixed costs of the facility; estimates of the costs of disposing of spent fuel in a geological disposal facility, including a contribution to the fixed cost of the facility. There is a danger that the hon. Gentleman might simply have thought that I was repeating myself when in fact I wanted to emphasise to a sceptical Liberal Bench both the importance of our policy and the importance of proof-reading. The significant risk premium will cover the risk that the eventual costs of building a geological disposal facility to dispose of intermediate-level waste and spent fuel are higher than estimated and the risk that geological disposal facilities are not available when required by the agreed schedule for the Government to take title to and liability for the waste.
We are developing a methodology for establishing a fixed unit price. We will test this methodology with the financial industry to ensure that we make use of the best available expertise on how to price risk properly. We have begun work to update our estimates of the cost of decommissioning and waste management for new nuclear power stations and more information on these issues is set out in the consultation published on 22 February. This, along with the NDA’s exercise to estimate the costs of geological disposal, will be key in determining the appropriate level for the fixed unit price. Our cost estimates are being built using the best available information and data and, more importantly, tested by external experts. Therefore, I cannot be as precise as the hon. Gentleman was tempting me to be. I will see if I can be helpful later.
12.45 pm
I do not believe that the amendment is either necessary or compatible with the approach that I briefly described, and I will therefore ask the hon. Gentleman to consider withdrawing it. Before I sit down, however, I will try to be helpful about the concept of “unreasonable delay”, which he felt to be vague.
We do not consider the term vague. It also applies in relation to decommissioning of offshore oil and gas installations and offshore renewable installations. It is not defined in the legislation or in any other legislation. That may not seem to the hon. Gentleman to be the most powerful argument that I have put to him today. However, I am not aware that the lack of definition has caused any difficulty in the context of the other legislation. That is the clincher. I will try to come back to the hon. Gentleman to see whether, in comparison—
Charles Hendry: Will the hon. Gentleman give way?
Malcolm Wicks: I am in the middle of a very strong argument here, so I am delighted to give way.
Charles Hendry: I thought a modest intervention might give the Minister a chance to gather some even more useful arguments explaining why this is not the right way forward. The hon. Member for Northavon has said that he is an economist, and likes a bit of clarity with his noughts. Perhaps the Minister could give us an idea of whether we are talking about two weeks, 10 weeks, a year or two years. It has not yet been tested through the courts, so there is no legal definition, but the Government must have in their own minds a definition of “unreasonable delay”.
Malcolm Wicks: I will try to be helpful, albeit after a little delay, and perhaps not this morning. It is a perfectly reasonable question, and the hon. Gentleman is a reasonable man who will realise that, despite the comparisons with oil, gas and renewables, this is uncharted territory. He is entitled to a more specific answer, which I will work on during the lunch hour. I have dealt as best I can with issues relating to the fixed price for waste disposal costs. If I can add more this afternoon, I will do so.
The hon. Member for St. Albans—Verulamium—asked whether representations could include negative representations. The answer is yes. Occasionally, I can be very clear in my answers, and am delighted to be able to do so. The hon. Member for Wealden asked how the Secretary of State would tell an operator that he would not approve a plan. It will be through discussions with the operator and then, formally, in writing. The Secretary of State will set out reasons. He will make decisions based on advice from our new advisory board. No formal appeal from the operator will be allowed, but the operator can of course resubmit the programme. I hope that that will be considered reasonable.
As for the cost of decommissioning a new nuclear power station, we set out in the consultation document an estimate of £600 million. Waste disposal costs were estimated to be £300 million. However, we have been working to update estimates of the costs of waste management and decommissioning. In the consultation on funded decommissioning programme guidance, we published the cost modelling methodology that we have developed, and we envisage being able to publish revised estimates towards the end of 2008 or in the first quarter of 2009. That is rather more precision about the noughts than I thought at one stage I would be able to give to the hon. Member for Northavon.
There are one or two issues that I have not been able to cover, but I hope to catch your eye, Mr. Amess, and deal with them in due course.
Martin Horwood: I am afraid we have found that, as with amendment No. 40 and the associated amendments, we have a rather frustrating situation with regard to amendment No. 45. That amendment seems to us to be in line with Government policy, if Government policy really means what it says. It seeks to add absolute transparency to the Bill, to ensure that it is clear that the taxpayer will never again be liable for the kind of cost miscalculations and spiralling subsidies that characterised the first generation of nuclear power stations.
Amendment No. 45 seeks to address the crux of that argument by making it absolutely clear that the Secretary of State should not approve a funded decommissioning programme if it in any way limits its liabilities. We have discussed the issues, how difficult it is to calculate the costs, the Paris convention and so on, and yet the Government will not include this fundamental rule in the Bill, even though they seem to aspire to it in principle.
I am afraid that, on this occasion, as with amendment No. 40, I will be pressing amendment No. 45 to a Division.
Question put, That the amendment be made:—
The Committee divided: Ayes 2, Noes 13.
Division No. 2 ]
Horwood, Martin
Webb, Steve
Baron, Mr. John
Binley, Mr. Brian
Hendry, Charles
Ladyman, Dr. Stephen
Main, Anne
Palmer, Dr. Nick
Reed, Mr. Jamie
Robertson, John
Seabeck, Alison
Swire, Mr. Hugo
Tipping, Paddy
Whitehead, Dr. Alan
Wicks, Malcolm
Question accordingly negatived.
Clause 42 ordered to stand part of the Bill.
The Chairman: I said first the “Ayes have it”, but it was a Freudian slip.
Malcolm Wicks: That was almost the Liberals’ finest moment for 100 years.
Clause 43
Prohibition on use of site in absence of approved programme
Question proposed, That the clause stand part of the Bill.
Malcolm Wicks: We can possibly now make some faster progress, having had a number of useful debates. Clause 43 will ensure that any person operating a new nuclear power station without an approved funded decommissioning programme in place or allowing another person to do so will be committing a criminal offence. The penalty for such an offence will be a fine not exceeding the statutory maximum—currently £5000—in the magistrates court, or up to two years’ imprisonment or an unlimited fine in the Crown court.
The purpose of creating this criminal sanction is to ensure that robust and prudent programmes are in place before operators start building or operating new nuclear power stations. Putting in place approved programmes at this stage should ensure that the operator takes full responsibility—meeting the costs of decommissioning and waste management—and that the prospect of recourse to public funds is remote at all times. This is the fundamental objective of our policy. The penalties for committing this offence mirror those contained in section 40 of the Petroleum Act 1998, which governs the failure to submit an abandonment programme for the decommissioning of oil and gas installations. The same penalties are also contained in section 113 of the Energy Act 2004, which governs off-shore renewable decommissioning programmes. It should be noted that the provisions will complement existing legislation and conditions that apply to existing nuclear power stations. Section 1 of the Nuclear Installations Act 1965, which sets out offences and penalties for contravening requirements in relation to the use of a site, and the Health and Safety Executive’s nuclear site licence conditions will apply to new nuclear power stations just as they do to existing ones.
Question put and agreed to.
Clause 43 ordered to stand part of the Bill.
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