Energy and Climate Change Committee - Draft Energy Bill: Pre-legislitive ScrutinyWritten evidence submitted by the Office for Nuclear Regulation (ONR)

Summary

The Office for Nuclear Regulation (ONR) operates currently as an agency of the Health and Safety Executive. It is responsible for the regulation of nuclear safety and security on civil nuclear sites, the regulation of nuclear safety on defence nuclear licensed sites, the regulation of the transport of radioactive material and the application of the UK nuclear safeguard obligations.

ONR fully supports the provisions within the draft Energy Bill to establish an independent statutory Office for Nuclear Regulation. ONR has worked closely with the Health and Safety Executive, Department of Work and Pensions and Department for Energy and Climate Change in the development of the draft Bill.

The draft Energy Bill brings together all of the ONR’s functions under one piece of legislation and will give the ONR direct responsibility for those functions that it performs.

The provisions in the draft Bill provide the means to establish and sustain a modern independent nuclear regulator based on the better regulation principles of transparency, accountability, proportionality, targeting, and consistency.

The provisions in the bill support independent nuclear regulation in the UK. The position of the Chief Nuclear Inspector will be established in statute for the first time. The regulatory powers and functions of the ONR will be delegated to the Chief Nuclear Inspector ensuring that nuclear regulation continues to be independent and technically based into the future.

The provisions of the draft Energy Bill provide the ONR with flexibility over its financial and employment arrangements to ensure it can meet its resource requirements on a fully sustainable basis.

ONR already charges the vast majority of its costs to industry, currently around 95%. The proposed Energy Bill enables ONR (through regulations) to charge up to 100% of its costs to industry.

Introduction

1. In the UK, the nuclear industry is regulated by the Office for Nuclear Regulation (ONR) as an agency of the Health and Safety Executive (HSE). Our overarching mission is to secure the protection of people and society from the hazards of the nuclear industry. This responsibility covers the regulation of nuclear activities associated with power generation, fuel cycles, certain defence activities,1 and research, through to decommissioning.

2. Under UK law (the Health and Safety at Work etc. Act 1974) employers are responsible for ensuring the safety of their workers and the public and this responsibility is reinforced on nuclear sites by the Nuclear Installations Act 1965 (NIA), as amended.

3. We regulate civil nuclear sites primarily through a nuclear site licensing regime under the Nuclear Installations Act 1965. We require all licensees to comply with conditions attached to the nuclear site licence and to operate in accordance with an adequate safety case as established by assessment against our Safety Assessment Principles (SAPs).2 By doing so, a multi-barrier approach to preventing accidents (defence in depth) along with other primary principles ensures licensees carry out their operations in a way that reduces risks to so far as is reasonably practicable.

4. We are also responsible for the regulation of a number of other areas in addition to our nuclear safety role. This includes the regulation of civil nuclear security, regulation of the transport of radioactive material and the application of nuclear safeguards to ensure that the UK complies with its international nuclear safeguards obligations.

5. ONR was established as an agency of the HSE on 1 April 2011 in anticipation of the legislation to create a new independent statutory body outside of the HSE to regulate the nuclear industry. This legislation is included in Part 2 of the draft Energy Bill.

Evidence

Involvement of the interim ONR in the draft Energy Bill

6. ONR has worked closely with its parent organisation, HSE, the HSE sponsoring department, the Department of Work and Pensions, and the Department for Energy and Climate Change in the development of the policy, proposed governance of the statutory ONR and draft legislation. As part of this process, ONR has consulted internally with nuclear safety, security, safeguards and radioactive transport inspectors to ensure that the draft legislation is fit for purpose from an operational perspective.

Establishing a new independent regulator

7. One of the key recommendations in HM Chief Nuclear Inspector’s report3 following the earthquake and tsunami in Japan last year, was the nuclear regulator should be able to clearly demonstrate to stakeholders its effective independence from bodies or organisations concerned with the promotion or utilisation of nuclear energy. Such independence needs to be both in law and in practice.

8. Currently the ONR’s functions originate from a number of different government departments. The core nuclear safety functions are derived from the Health and Safety Executive of which it is an agency. The nuclear security and nuclear safeguards functions were both transferred from what was the Department for Trade and Industry to HSE/ONR in 2007. Finally, the radioactive transport function was transferred from the Department for Transport to HSE/ONR in 2011. Different agency agreements and memoranda of understanding govern each of these functions.

9. Under the draft Energy Bill, all of ONR’s functions are pulled together in one piece of legislation making it clear what is within the remit of the regulator. ONR will also have within its remit the regulation of conventional health and safety on nuclear sites. These functions, instead of being those of the Secretary of State delegated to ONR, will become ONR’s own functions. Additionally, the post of the Chief Nuclear Inspector will be established in statue for the first time. The regulatory functions and decisions of the ONR will be delegated to the Chief Nuclear Inspector to ensure that nuclear regulation will continue to be technically based and independent of other interests into the future.

10. Finally, it is intended that the statutory ONR will be sponsored by DWP, ensuring a distance between the regulator and the DECC, which is responsible for nuclear energy policy.

11. These steps are crucial in the development of a regulator which is, and is seen to be, demonstrably independent from Government, the industry and other influences

ONR Board and accountability to Ministers

12. The draft Energy Bill requires the appointment of a skills-based Board made up of executive and non-executive members (the latter always outnumbering the former). One non-executive Board member will be required to have expertise or experience which relates to the ONR’s civil nuclear security purpose. Among the non-executives will be an option for a HSE appointed member, this arrangement will be replicated on the HSE board to which the ONR may appoint a member. This provision is to retain links between the two organisations once the ONR becomes a stand-alone body, specifically to maintain consistency in the regulation of health and safety legislation.

13. The interim ONR has already established a board on these principles, however unlike the interim board; the statutory ONR Board will be directly accountable to the Secretary of State, rather than via HSE. This will ensure that there is clear and comprehensive governance of the nuclear regulator, with a Board who have both the business decision making powers to administer an independent regulator and direct accountability to Government and Parliament for those decisions.

14. Under the legislation, the Board is responsible for exercising all the functions of the ONR. In practice, most of the ONR’s functions will be delegated to ONR staff whilst the Board retain an overall remit with respect to the governance, accountability, strategy, planning and reporting of the organisation. Non-executive directors, will not be able to undertake specific regulatory functions or decisions, such as the granting of a site licence or making the decision to prosecute. In practice, it is intended that all regulatory functions and decisions will be delegated by the Board to the Chief Nuclear Inspector (which will become a statutory role) who will then delegate functions as appropriate to ONR staff. The Chief Nuclear Inspector will be the authoritative head for the ONR’s regulatory function.

Openness and transparency

15. The (existing) ONR board has committed to follow Government policy on openness and to publishing all papers on the ONR website (including partial disclosures with redactions) unless closed under the Freedom of Information Act 2000 or the Environmental Information Regulations 2004. As part of a wider change programme, ONR is working towards making most of its regulatory decision making documents publicly available on its website.

16. The draft Bill will require ONR to produce and publish a strategy at least every five years and an annual plan and report—allowing parliamentary and public scrutiny of ONR’s performance of its functions. The interim ONR is already establishing similar practices in anticipation of becoming a statutory body.

17. ONR, when it becomes a statutory corporation will be a public body for the purposes of the Freedom of Information Act and Environment Information Regulations and the provisions of such legislation will continue to apply to ONR.

Regulatory Powers

18. One of the policy principles underpinning the drafting of the Bill was that the core powers of the regulator and the responsibilities of duty holders should not change. ONR, as an agency of HSE, currently obtains the majority of its regulatory powers through the Health and Safety at Work Act 1974.

19. The draft Energy Bill therefore recreates many of these powers for the statutory ONR and its inspectors. As the drafting of legislation has moved on in many ways since 1974, it would not have been appropriate for parliamentary counsel to copy-across drafting “word for word” from the Health and Safety at Work Act. ONR has worked with DECC officials, lawyers and parliamentary counsel to ensure that Bill clauses accurately recreate those regulatory powers that ONR currently has as part of HSE. We believe that this has been achieved and that additionally, the draft Bill provides greater clarity for inspectors and duty holders alike in the extent and application of ONR’s powers.

Staff recruitment and retention

20. The recruitment market for nuclear safety specialists is competitive and in the context of Fukushima and new nuclear (both domestic and international) this is expected to harden further. ONR is in direct competition with the private sector for these skills and the civil service restrictions on pay and conditions constrain ONR’s ability to be a competitive player in the recruitment and retention of specialist staff on a sustainable basis.

21. The Energy Bill will give the statutory ONR flexibility over its financial and employment arrangements. ONR will use this flexibility to work towards being an “employer of choice” to attract and retain specialist staff within the context of ensuring effective nuclear regulation.

Charging and Fees

22. ONR currently recovers 95% of its costs from industry using the powers and provisions contained within the Health and Safety at Work Act 1974, Nuclear Installations Act 1965 and Health and Safety (Fees) Regulations 2010. The draft Bill allows ONR, through regulations, to move to 100% cost recovery and this will be an aim of ONR once it becomes a statutory body.

23. The main areas where there is the potential for new industry charges relate to the transport of radioactive material and nuclear safeguards functions. Before any new charges are applied to industry, these will be subject to formal consultation exercises.

Conclusions

24. ONR fully supports the draft Energy Bill and believes that it includes the provisions needed to establish an effective, transparent and independent regulator. The proposals retain the best of the current system, keeping the robust safety standards already in place, whilst providing ONR with the flexibility to deal with the challenges presented by the future.

25. The draft Energy Bill brings together all of ONR’s functions within one piece of legislation for the first time—providing greater transparency. Furthermore, these functions will no longer be delegated down from the Secretary of State but will be ONR’s—with the regulatory functions delegated directly to the Chief Nuclear Inspector, a post established in statute for the first time—affording greater independence to the nuclear regulator.

26. ONR is already putting in place, as an agency of HSE, much of the groundwork needed to be a more efficient and transparent regulator. The provisions within the draft Energy Bill will provide ONR with the independent status needed to build on this work to create an appropriately resourced and responsive regulator for the future challenges of the nuclear sector. With this in mind the ONR are developing a comprehensive transition programme so that, subject to parliamentary approval and royal ascent of the Bill, the organisation can move quickly and efficiently to its new independent status and from the earliest point implement the provisions in the Bill.

June 2012