Examination of Witnesses (Questions 60-79)
DR IAN
ROXBURGH, MR
JAMES MORSE
AND MR
MARK HIGSON
25 FEBRUARY 2008
Q60 Mr Dunne: You may not want to
tell us about it today but I urge you to think about one because
I think you will need one in due course. Dr Roxburgh, could we
turn to page 26? Paragraph 3.20 refers to an income shortfall
which the authorities had as a result of additional work required
on the Sellafield Ponds and shortage of income coming through
as referred to in paragraph 3.18. The footnote of paragraph 3.20
says that as at December 2007, the Authority had submitted a request
to HM Treasury for flexibility over the end year flexibility,
basically to use up your reserves, in order to meet your spending
commitments during the year. Have you finalised those discussions
with the Treasury? In other words, have you secured the money
that you need for this year?
Dr Roxburgh: You are talking in
terms of the current financial year.
Q61 Mr Dunne: I am, yes.
Dr Roxburgh: I am satisfied that
in the current year all necessary steps have been taken to ensure
that we can balance our books and meet our obligations by the
year end.
Q62 Mr Dunne: Was it a surprise to
you that you had to go cap in hand to the Treasury to meet this
year's commitments?
Dr Roxburgh: In the sense that
commercial income can be rather lumpy and given the age of the
plant things can stop in short order. Of course it is a surprise
when something like that happens; that something like that could
happen would not be a surprise.
Q63 Mr Dunne: The Comprehensive Spending
Review that was published in November, could you clarify for us
and perhaps provide a note as to what the comprehensive spending
review allocation is for your Authority for the next three years
and do you feel, in light of the experience in the current year,
that you have adequate resources?[2]
Dr Roxburgh: I can do it by way
of a note but I can tell you now that the figure is 8.5 billion
over the three years to the CSR period. As I indicated earlier
that is a £671 million increase over CSR 2004 and a 21% increase
in grant in aid.
Q64 Mr Dunne: Will it be sufficient?
Dr Roxburgh: There are always
emerging challenges and, as I indicated in opening to the Chairman's
questions, the more we look the more we will find. At the end
of the day we have a very good dialogue with government and we
will need to address the issues as they arise.
Q65 Mr Dunne: Could I finally ask
you a question about the transfer of shareholding in the Authority,
the Shareholder Executive. Is this a precursor to an attempt to
sell the government's interests in the Authority?
Mr Higson: No, it is not. The
Shareholder Executive is simply a body in government that is experienced
in governance, that means both governance of commercial companies
but also governance of organisations such as the NDA.
Q66 Mr Dunne: Do they have experience
of dealing with nuclear facilities? Does their role and oversight
of the shareholder relationship also extend to an operating relationship
between the Authority and the Executive or will you continue to
maintain the main relationship on operational matters?
Mr Higson: Operational matters
are for the NDA; the Shareholder Executive has a governance role,
it is not actually running the NDA. The Shareholder Executive
in its governance role will be dealing with such items as approving
the strategy and approving the budget. There is a division in
the Department between that governance role and a broader nuclear
policy. We see virtues in separating out the two roles so that
they are clear and not muddled.
Q67 Mr Dunne: In the event that Dr
Roxburgh needs more money in future years as he has this year,
he will be going to the Shareholder Executive who will have no
direct responsibility for allocating that money because that would
have to come back to the Department.
Mr Higson: The Shareholder Executive
is part of the Department, so in dealing with, for example, the
next spending round there will be dialogue between the NDA and
the Shareholder Executive but in the context the Shareholder Executive
will be discussing with the whole Department and the Treasury
what is the appropriate budget across the whole of the Department's
activity.
Q68 Mr Mitchell: You have my sympathy
because in a sense you are involved in cleaning up after one of
the biggest cons in British history, a con, as it were, by a nuclear
industry which said it could produce cheaper power at a competitive
price and that Britain would lead the world if we invested in
this programme. We did and now we are lumbered with this mess.
Why is it that we read in the Report that the plants were not
designed with decommissioning in mind? Was the assumption that
they would go on forever?
Dr Roxburgh: I cannot say because
I was not there at the time. It is as simple as that.
Q69 Mr Mitchell: You are in a sense
perpetuating the con because you are the reassuring face of this
confidence trick and pretending that you can put a finite figure
on something which is basically going to escalate each year, indeed
it has escalated because the initial aggregate plan in 2003 estimated
future costs at around £56 billion and in 2007 that had gone
up to £73 billion. That is a huge increase which is going
to go on.
Dr Roxburgh: I think as I tried
to indicate in opening in answering the Chairman's question, we
are in the middle of a process that everyone recognises—indeed
the Report recognises—is going to take a number of years.
Q70 Mr Mitchell: Are you saying that
the costs will increase as your understanding increases?
Dr Roxburgh: Yes.
Q71 Mr Mitchell: The understanding
is fairly imperfect at the moment so does that mean there is going
to be a substantial increase to come?
Dr Roxburgh: On the model that
we predicated there is a rise as you look, that is true, but we
are also seeing evidence of a plateau and as I indicated with
the low level waste in our first competition contract we are contractualising
a double digit reduction in the lifetime plan. As you bring in
this world class management I am satisfied that the numbers will
first stabilise and secondly they will start to come down. I am
quite convinced of that.
Q72 Mr Mitchell: Yes, but the model
does not allow for the unexpected. You have unexpectedly had to
use resources from your budget, diverted them from other parts
of the programme, the two key sites with problems. Did the model
anticipate that?
Dr Roxburgh: Yes. If you go, as
I said earlier on, to our strategy document at pages 20 and 21
we made it quite clear what our number one priority would be and
the reason behind that was that we might have to make decisions
as to where our funding went.
Q73 Mr Mitchell: That is a common
sense provision. No model can anticipate that, nor can it anticipate
the scale of problems you may well find which you do not know
about at the present moment. DBERR is complicit in this because
you want a finite figure put on this which you can accept because
you want to say that the new programme, carefully costed, will
not incur this kind of decommissioning cost, that the industry
itself can pay for it. That, too, is a myth.
Mr Higson: I think it is important
that the NDA should continue its work of identifying what the
costs are. It is extremely important and I think it is worth bearing
in mind that prior to the NDA's existence both work on clean-up
and indeed estimating and drawing up plans was pretty rudimentary.
Q74 Mr Mitchell: The lessons from
this disaster are that the costs are going to be huge and I doubt
that you can make confident predictions that the industry will
carry them. Can you assure us that the industry will carry them
and there will not be anything falling back on the tax payer?
Mr Higson: We have put in place
all the arrangements that can reasonably be put in place—or
are proposing to put them in place—to ensure that new nuclear
operators pay for the costs of decommissioning. Again I would
like to re-emphasise the point about the £73 billion costs
of cleaning up the legacy which is that the majority of this relate
to facilities of which there is no parallel in the new nuclear
programme.
Q75 Mr Mitchell: The Nuclear Decommissioning
Authority told us it put in place in 2003 reliable estimates for
the costing and then they went up to £73 million by 2007,
so what have you got in place?
Mr Higson: Dr Roxburgh may want
to add to that but I do not think a claim was ever made that the
initial estimates of the costs were the last word. For the future
going forward what will be different is that there is a requirement
that there should be a clear plan of decommissioning even before
the power stations start to operate. That is what is different.
Q76 Mr Mitchell: You are complicit,
are you not, in this confidence trick of pretending that a finite
figure can be put and that can be held because you want that to
happen for the new stations.
Dr Roxburgh: I am confident that
a finite figure can be obtained. As I have indicated, we have
already got emerging evidence for that but if I could give you
a couple of other examples, large numbers are made up of aggregating
many small exercises. At Sellafield there is a process for taking
liquid high level waste, evaporating it and then mixing it with
glass. It is then put in stainless steel containers—Mrs
Browning, you might well have seen this when you were at Sellafield—and
then they are placed in a passively ventilated store.
Q77 Mr Mitchell: That sounds marvellous
but you have not yet got any idea of the costs of getting rid
of this high level waste. You cannot tell us where you are going
to put it, you cannot tell us how much it is going to cost, whether
you are going to have to dig an enormous hole in the ground or
whether you are going to export it and sink it in the Atlantic
or whatever. You cannot tell us, can you?
Dr Roxburgh: I think we have a
reasonable idea.
Q78 Mr Mitchell: Where is it going
to go?
Dr Roxburgh: The Government policy
is that in due course we will have a deep geological repository
for our high level waste.
Q79 Chairman: Remind us where that
will be.
Dr Roxburgh: Where the repository
will be?
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