The Nuclear Decommissioning Authority’s management of the Magnox contract Contents

Conclusions and recommendations

1.There remains significant uncertainty over the cost and timetable for decommissioning the Magnox sites and estimates continue to increase. The NDA acknowledges that it does not have full understanding of the condition of the 17 sites across its estate, including the 10 former Magnox power stations. Consequently, there is significant uncertainty about how long decommissioning will take and how much it will cost. The NDA considers that it now has its best estimates yet of the cost and timetable for taking the Magnox sites to the ‘care and maintenance’ stage of the decommissioning process, but the latest estimates cover a very broad range of outcomes. The NDA now estimates that it will cost between £6.9 billion and £8.7 billion, between £1.3 billion and £3.1 billion more than its previous estimate made in 2017, and will take between 12 and 15 years for the Magnox sites to reach the care and maintenance stage of the decommissioning process. Our past experience suggests these estimates will soon be out of date and that costs may increase further. Reliable estimates of the potential costs and duration of decommissioning each site are important to support decision-making about the most efficient ways to decommission the sites and the order in which they should be tackled. We are concerned that the NDA’s ambition to decommission more quickly and efficiently will be hindered by this perpetual lack of knowledge about the condition of sites.

Recommendations: The Nuclear Decommissioning Authority should set out how it will develop a clearer means of reporting publicly on the level of uncertainty and risk across its sites.

The Nuclear Decommissioning Authority should also set out how it will prioritise its work on its sites in order to decommission them in the safest and most efficient way.

2.The uncertainty affecting the Magnox sites reflects a wider uncertainty about the costs and timetable of decommissioning the whole civil nuclear estate. According to the NDA’s most recent estimates it will cost the UK taxpayer £132 billion to decommission the UK’s civil nuclear sites and the NDA estimates that the work will not be completed for another 120 years. The largest proportion of this cost is to clean up and decommission the NDA’s largest site at Sellafield, but the cost to decommission the NDA’s Magnox sites is also substantial, as is the liability associated with decommissioning the next family of nuclear power stations, known as the Advanced Gas-Cooled Reactors (AGRs). The money held in the Nuclear Liabilities Fund, which exists to fund the decommissioning of the AGRs specifically, was increased from £9.5 billion by an additional £5.07 billion this year to reflect the latest estimate of the work required. The NDA is consulting publicly about its strategy for cleaning up its nuclear sites. It may be possible to reduce the time it will take to fully decommission the sites of former nuclear power stations from around 85 years to more like 40–45 years. This could significantly reduce the long-term cost of decommissioning the sites as 40% of the overall decommissioning cost can be spent in maintaining, operating and safeguarding the sites while decommissioning activity is taking place. There is also an opportunity to save taxpayers’ money by accelerating the programme to create a deep storage facility, known as the Geological Disposal Facility, to store highly radioactive waste that is currently held at interim facilities at Sellafield and the sites of former power stations elsewhere in the UK. The NDA and the Department are consulting the relevant regulators and interested communities to identify a suitable site for such a facility, but were not able to indicate a timeframe in which it might be achieved.

Recommendations: Taking into account the feedback from its public consultation, the Nuclear Decommissioning Authority should exploit opportunities to reduce the time taken to decommission its sites, and should identify the impact of such reductions on the cost profile.

The Department and the Nuclear Decommissioning Authority should take whatever steps are necessary to provide a firmer estimate of the cost of decommissioning the sites of the Advanced Gas-Cooled Reactors so that the public has a more reliable indicator of the scale of the public liability.

The Nuclear Decommissioning Authority and the Department should make it a priority to progress their plans to find a location for a Geological Disposal Facility in order to reduce interim storage costs at Sellafield and elsewhere, and should confirm when they consider such a Facility might feasibly become available for the storage of waste.

3.A shortage of the right skills within the Nuclear Decommissioning Authority and across the nuclear industry remains a significant barrier to progress. In our 2018 report on the failure of the Magnox contract we were highly critical of the lack of skills—particularly commercial skills—in the NDA. There is also a shortage of technical skills in the pipeline. Since then, the NDA has increased its focus on recruiting experienced staff to its own executive team and to the leadership of its subsidiaries which manage the sites on a day to day basis. But recruiting the right skills remains a significant challenge, particularly with the NDA and its subsidiaries competing with the private sector for the same people. It is encouraging that the NDA and the Department are attempting to meet the skills challenge with, for example, the introduction of the nuclear graduate scheme to increase capacity in the sector as a whole. It is also encouraging to hear that 46% of the latest cohort to the scheme were women. The Department says that it has made its own improvements in capacity and capability to oversee the NDA’s activities but, as we often see, salaries in the civil service mean that the Department risks losing skilled staff to private sector organisations in the industry.

Recommendation: Within 6 months of publication of this report, the Department and the Nuclear Decommissioning Authority should publish a detailed plan for how they plan to meet the demand for skills across the UK nuclear industry over the next 5–10 years.

4.For the new delivery model to work, it will be vital that the Department exercises strong oversight of the Nuclear Decommissioning Authority and implements the findings of forthcoming reviews into the failure of the original Magnox contract and the role of the Authority. Under the previous delivery model of outsourcing the decommissioning of nuclear sites to a ‘parent body organisation’ from the private sector, the Department was a further step removed from exercising oversight of the decommissioning process than it is now. Indeed, the Department acknowledges that this led to it missing some of the problems that arose with the Magnox sites and contract. The Department tells us that its relationship with the NDA has changed, with improved oversight of both the NDA’s strategy and progress with its major projects, a dedicated team in the Department looking at the NDA, and a representative of UK Government Investments on the NDA’s own board who reports to the Department’s accounting officer. But we remain concerned about the Department’s capacity to oversee the NDA effectively, and about the number of players from different parts of Government who are involved. Key to learning lessons from the past and establishing appropriate oversight and governance will be implementing the recommendations of the Holliday inquiry into the Magnox contract and the Department’s ‘Tailored Review’ of the role of the NDA. We welcome the Department’s commitment to completing and publishing these reports as a priority, but it is frustrating and concerning that it is taking so long for these important reviews to be published.

Recommendations: On publication of the Holliday report and tailored review, the Department and the Nuclear Decommissioning Authority should set out publicly what has been learnt from them and how the reports are being used to inform the development of the new delivery and governance models.

In responding to this report, the Department should set out clearly its rationale for relying on UK Government Investments to represent it on the Board of the Nuclear Decommissioning Authority, rather than such oversight being provided directly by its own team which is dedicated to looking at the NDA.

5.The Nuclear Decommissioning Authority is not doing enough to exploit its various assets, either for the benefit of local communities or the UK economy as a whole. The UK was the first country to establish a civil nuclear power generation industry and is still a world leader in nuclear decommissioning. It can point to some notable achievements in relation to the decommissioning of the Magnox sites alone, such as the successful defueling of all the Magnox reactors which has reduced the level of radioactivity on the sites by 95%, and the largest clean-up of asbestos waste to have been undertaken in Europe at Chapelcross. Furthermore, the NDA has provided advice and exported skills to other countries, including Japan in relation to the clean-up of Fukushima and the Ukraine in relation to Chernobyl. The NDA receives around £800 million a year in income from its commercial activities. Given the expertise and technologies which the NDA and the UK nuclear industry have developed over the years, there are further opportunities, in fields such as Artificial Intelligence and robotics, with export potential which could benefit the UK economy and provide jobs for people in local communities. The NDA also owns and occupies substantial amounts of land. It is encouraging to hear that around 50 acres of land at Harwell has been released and is currently home to a manufacturing centre for coronavirus vaccine. The NDA’s wider estate contains land which could be exploited for commercial and socially beneficial use and could provide much needed employment in nearby communities.

Recommendation: The NDA should develop a strategy for maximising the economic benefits of developing and, where appropriate, exporting its knowledge and assets to alleviate the burden on the taxpayer. These include the skills and experience of the UK nuclear industry, the decommissioning technologies it has developed, and the land and other physical assets the NDA holds.

6.Public accountability is hindered by a lack of transparency about the scale and nature of the challenge of decommissioning and the performance of the NDA. Nuclear decommissioning will cost current and future generations of taxpayers’ substantial sums of money and has a significant impact on the lives of those who live near one of the NDA’s sites. However, little information about, for example, the timescales for completing decommissioning work and returning land to communities is readily available to the public. Greater transparency about progress with decommissioning would improve public accountability, help to stimulate improved performance, and increase the visibility to local communities of the activities and opportunities available on NDA sites.

Recommendation: NDA should be more transparent about its current and future plans with the local communities surrounding its 17 sites to strengthen public accountability and make clear the socioeconomic impact of its planned activities.

Published: 27 November 2020 Site information    Accessibility statement