Energy and Climate Change Committee - Draft Energy Bill: Pre-legislitive ScrutinyWritten evidence submitted by the Nuclear Industry Safety Director’s Forum

1. The Safety Directors’ Forum

1.1. The Nuclear Industry Safety Director’s Forum (SDF) brings together Senior Executives and Board members who carry the responsibility for the independent assurance of nuclear safety, in addition to nuclear security, environmental, health, quality and conventional safety matters (EHSQS) for their companies. Every site involved in civil nuclear operations, licenced and regulated by the Office for Nuclear Regulation (ONR), and every site involved in defence nuclear operations, authorised and regulated by the Ministry of Defence, are represented as are the three new build consortia in the UK and ‘small users’ such as universities and pharmaceutical companies. In total we have some 27 individual members all of whom are independent of operational line management.

1.2. A key role of the SDF is to identify and consider the strategic EHSQS issues facing the industry and agree how the industry should respond. One of our key objectives is to ensure the high standards of nuclear safety and security achieved in the UK over the years is maintained and improved. We work closely with the UK regulators and DECC, both of whom we meet twice yearly.

2. Overview

2.1. The SDF welcomes the opportunity to participate in the Energy & Climate Change Select Committee’s pre-legislative scrutiny of the draft Energy Bill. Our primary interest in the draft Energy Bill relates to those sections concerned with the ONR and its formalisation as a body corporate under primary legislation, namely Part 2, Clauses 48 to 81, and Schedules 4 to 6. The interest of individual member companies of the SDF will extend across the Bill in its entirety but the Forum’s comments in this submission are restricted to those sections listed above.

2.2. Our submission is also relatively brief as we believe that, as it is currently drafted, the Bill is strong and effective in delivering on the Government’s objective of creating an independent nuclear regulator, an objective that the industry and the SDF have supported for many years. We believe that the need for a strong, independent regulator is one of the key learning points from Fukushima and that the creation of the ONR, led by a Chief Inspector, will help in providing clarity and certainty for the industry while at the same time giving the general public confidence that the sector is being properly scrutinised. We are confident that, in very large part, the draft Energy Bill will serve to ensure that the nationally and internationally recognised work that the ONR is undertaking will grow and be sustained into the future. The Bill will also ensure that ONR will continue to develop as a consistent, proportionate, transparent and efficient regulator.

2.3. Having given this strong support for the draft Bill, we would wish to make one very important general point about the legislation’s implementation, along with a small number of more specific points relating to the detailed content of the Bill.

3. The Need for Timely Implementation

3.1. It is now three and half years since Dr Tim Stone submitted his recommendations1 on nuclear regulatory reform to the then Secretary of State, which included a wide-ranging restructuring of the Nuclear Directorate. Clearly much progress has been made in this regard but we believe that the prompt placing of the ONR on a full independent statutory footing is a crucial step in delivering the positive benefits that Dr Stone identified in his report.

3.2. To highlight just one of these areas, Dr Stone identified that “the pay and other critical compensation elements of current and prospective (Nuclear Installation Inspectorate) staff must be adjusted rapidly to enable recruitment of the full complement of staff needed” (p.34) and went on to note that certain skills are in very short supply. This is an issue that is as pressing today, if not more so, than it was in 2008 and we understand that the ONR, despite the changes it has undergone, is still struggling to recruit the key staff it needs due to the civil service pay restrictions it continues to be subject to. The longer it takes to free ONR from such restrictions the more significant the resourcing problem becomes.

3.3. Although additional scrutiny of legislation is to be generally welcomed, given the cross-party support the formation of the ONR enjoys and given the importance of the role performed by it, continuing delay to the legislation granting the ONR full independence is both unnecessary and unwelcome. We would urge the Committee to do all it can to ensure a speedy and timely introduction and passage of this crucial legislation.

4. Non-Executive Directors

4.1. Schedule 5, and in particular paragraphs 2 and 4, deal with the appointment of up to seven non-executive members for the ONR, predominately by the Secretary of State. Paragraph 4, subsection (3) mandates that one non-executive member must have experience relevant to the ONR’s nuclear security remit and subsection (4) allows the Health and Safety Executive (HSE) to appoint one non-executive from amongst its members.

4.2. Without wishing to unnecessarily restrict the pool from which the remaining non-executives can be picked, we believe that it would be extremely beneficial if the Bill were to direct that one or even two non-executives had to have demonstrable and directly relevant experience in nuclear safety (as opposed to security) matters. This would assist the ONR in properly holding the industry to account and assist the industry through guaranteeing that a quorum of the ONR’s non-executives fully understands the requirements and regulations placed on nuclear licensed sites and operators. To ensure the appropriate degree of independence from the HSE, this mandated number of nuclear safety experienced non-executives should not include the HSE nominated non-executive.

5. Remuneration of ONR employees

5.1. For the reasons stated in paragraph 3.2 of this submission, the provision under Schedule 5, paragraph 12, subsection (2) of the draft Bill, which allows the ONR to set the terms and conditions of its own employees, including those relating to remuneration, is one of the most crucial in this part of the Bill. It is vital that it is retained in its entirety as the Bill makes its progress through the legislative process.

6. Fees and Charges

6.1. As stated in paragraph 2.2 of this submission, the industry and the SDF has strongly and consistently supported the creation of an independent regulator and has done so in the full knowledge that this would mean an increase in the level of fees and charges that the industry would incur to meet the costs of this stand-alone body. We reiterate this support here.

6.2. However, we would express some slight concern and reservation about the somewhat open-ended scope of Clause 81 to allow the Secretary of State to introduce secondary legislation to extend the ONR’s capacity to recover its costs. Any such process to alter the fees and charges to which licensed operators are subject must be carefully controlled and subject to full scrutiny by Parliament (eg subject to Affirmative approval from Parliament), as well as full consultation with industry.

6.3. Cost certainty is important for the whole nuclear sector but it is particularly crucial for the new build consortia as they look to take forward their nationally important projects in the UK and the provisions within Clause 81 must be viewed in this light.

June 2012