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Grand Committee

Tuesday, 24 June 2008.

The Committee met at half-past three.

[The Deputy Chairman of Committees (Lord Haskel) in the Chair.]

Energy Bill

(Third Day)

The Deputy Chairman of Committees (Lord Haskel): I apologise for the fact that my speech may be a little slurred; that is not because I have had an excellent lunch but because I have had a long session with the dentist and the injection has not quite worn off.

If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and will resume after 10 minutes.

Baroness Wilcox moved Amendment No. 41:

(a) his assessment of the appropriate levels of staff and resources in the Nuclear Installations Inspectorate,(b) the progress that has been made towards reaching that target, and(c) the effect on progress towards approval of new nuclear reactors.”

The noble Baroness said: A substantial part of the Bill is designed to allow nuclear installations to be built more quickly. As was mentioned by many noble Lords at Second Reading, the Bill is part of a three-pronged approach to establishing a secure low-carbon energy industry; the other parts consist of the Climate Change Bill and the Planning Bill. The Planning Bill is intended to streamline the planning process for large-scale infrastructure works. Nuclear build is undoubtedly part of that. It is therefore difficult to approach this matter in its entirety while scrutinising this Bill alone. However, the amendment addresses the problem of streamlining the process for nuclear development in a more general fashion.

We all agree that if new reactors are going to be built, they must undergo the most rigorous scrutiny to ensure long-term durability and safety. Considering the amount of growth that might be expected in the nuclear sector, it is important to make certain that we have the resources to keep up with this growth at a crucial stage in the development of nuclear build; namely, the approval of new reactors. This amendment would require the Secretary of State to assess what levels of staff and what resources would be required to ensure that the Nuclear Installations Inspectorate will be able to handle the potential growth in this industry.

In addition to assessing staff levels and resources, the Secretary of State would be required to report on what progress is being made to provide any support

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that is needed. This report would also come to bear on the effect of staffing levels on the efficiency of approving new reactors.

It is of paramount importance that new build should not be unduly held up only because there are not adequate resources to approve new reactors. If progress is going to be made in this direction, it would be sad to see the Government’s lack of foresight as the cause of delay; that might put off further investment and deprive the country of a valuable energy supply. I beg to move.

Lord Redesdale: Despite the opposition of those on these Benches to new nuclear build, I am not opposed to the amendment. If new nuclear reactors are going through the planning process and are to proceed, it would be irresponsible to put planning requirements in their way. However, I question the staffing level; I refer to the problem encountered with new reactors that have already been built, especially those in Finland and certainly one in France. Both reactors have had major problems with the strength and durability of the concrete-containing vessels. That is a key component to any nuclear reactor and has delayed both reactors coming online. It would lead to significant reductions in the serviceability of the reactors. In view of the importance of each reactor and how long they are expected to last—our current reactors are expected to last a good 10 years longer than they were designed to do—cutting down on any safety requirements for the sake of bringing the reactors on line far quicker would be of concern, especially if that were due to understaffing. That could be an issue, although I take it that that was not the purpose of the amendment. I doubt whether the Government will accept the amendment but I hope that, if they are minded to do so, they assure us that safety is a priority in any new nuclear build.

Lord Jenkin of Roding: I, too, support the amendment. The noble Lord, Lord Redesdale, referred to the French reactors being built at Flamanville and in Finland. I discussed this at some length last year with people from Areva, and the Finnish reactor is quite interesting. Their argument is that the delays—there certainly have been delays—and the additional costs that have flowed from them have been almost entirely due to very slow decision-making by the Finnish regulators. Areva has had to wait for long periods between the different stages of building that reactor, which I think is at Olkiluoto, and it felt that it was being not very well treated by the Finnish regulators.

So far as concerns the station being built at Flamanville—the other one that the noble Lord mentioned—I contacted EDF when the first complaint about the French regulator was announced a few weeks ago and, although it has recently been given much higher prominence in the British press, for reasons about which one can only speculate, the EDF people were not overly concerned about this. They agreed that they were not complaining about the activities of the regulators, which they recognise have to be thorough and persistent.

In connection with Flamanville, one understands that the French regulators have been concerned to ensure that there is no backsliding. As the design of the EPR reactor has become more settled and two plants are now under construction, EDF entirely

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recognises that it is appropriate that the regulators should make absolutely certain at every stage that all the safety and quality requirements that they lay down are being met. The French regulators have been quoted as saying that they had become aware of certain slapdash practices—I paraphrase their words; I am not sure what they were in French—and that they were very concerned to stop that happening. However, when I discussed this with the senior management at EDF a few weeks ago, they were not concerned that the regulators were acting in any way improperly. The noble Lord, Lord Redesdale, referred to the paramount importance of safety in this—the NII has had a remarkable record in this over the years—and it is right that they should be held to that.

Secondly, there was a good deal of publicity surrounding the visit of President Sarkozy to this country. There was talk of a lot of collaboration between the British and the French on nuclear matters and a reference to including regulation. I took that up through a Parliamentary Question, in which I asked whether this was likely to lead to a mutual approval process, whereby something that had been approved by a regulator in one country could be accepted by the other. If I were a Minister, I would be extremely cautious about that. That was the nature of the reply that I received—that there was no intention that there should be any mutual recognition of the standards. Without knowing all the details, it is difficult to work out exactly what this collaboration amounts to, or whether it is something that was put in as an embellishment or to add, as Gilbert would have said, “corroborative verisimilitude” to an otherwise unconvincing narrative of collaboration between the two countries.

My third point is the reason why I support the amendment. It has been well known in the industry for some time that the regulator has had difficulty in recruiting qualified people to fill the gaps. After all, the authorities broadly said for the best part of 10 years that they were not interested in nuclear power and that all that they would try to do was keep the nuclear option open. It may interest the Committee to know that Professor Robin Grimes runs a programme at Imperial College called KNOO—Keeping the Nuclear Option Open. When I suggested to him after last year’s White Paper that he might like to change the title, he said, “No, there’s far too much goodwill being invested in the name of KNOO”. So the KNOO it is. But this is the basis of the problem. With Ministers being firm in making it clear to their officials that they were not interested in nuclear new build, but only in decommissioning and the treatment of waste, it was hardly surprising that the chief inspector of the NII found it difficult to recruit. It was initially a problem of pay. However, after great fuss, he eventually obtained a significant uplift in the maximum that he could offer to future members of the NII, which has certainly helped matters. I hope that the Minister will reassure us that, with those enhanced rates of pay, the chief inspector, Mike Weightman, is able to recruit the people whom he wants for the work that he is now doing, which covers not just new build but decommissioning and the preparations for waste disposal

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and so on. But it is new build, particularly the approval of the new designs, which is taking a good deal of his time.

Mr Weightman made it clear to a meeting that I attended that the inspectorate was proposing to break with previous traditions. Instead of one announcement—“Yes, this is being approved”—he proposed that there should be a series of announcements as each stage of the approval process was reached, which would give greater certainty and enable potential investors in new nuclear build to take the matter forward without there being a long gap.

I am trying to put the amendment into context. Regulation, particularly of new nuclear build, is hugely important. I hope that the Government will smile on the amendment, because the public need regular reports on the process of regulation. That is what the amendment would achieve. I fully support it.

Lord Palmer: I, too, support the amendment, as all parties seem to do. The noble Lord, Lord Jenkin, made an important point about the regulator. Safety is of paramount importance, bearing in mind particularly how ill informed is the press on virtually all matters, particularly the future supply of energy. We need a regulator to make certain that safety is implemented to its fullest extent. I support the amendment wholeheartedly.

Lord Davies of Oldham: I am grateful to all noble Lords who have spoken to the amendment and to the noble Baroness for having introduced it. She triggered exactly the debate that I think she anticipated and hoped for about our preparations for the Nuclear Installations Inspectorate. It took on board the point which the noble Lord, Lord Palmer, emphasised: the crucial role of safety in these developments.

We are certainly not complacent about this issue. We recognise companies’ concerns about the assessment process. Steps are being taken to resolve the issue. I assure the Committee that the Government and the Nuclear Installations Inspectorate are committed to continuing to improve the recruitment and retention of inspectors where possible.

I am grateful to the noble Lord, Lord Jenkin, who generously said that there had been a pay increase to encourage greater recruitment of inspectors. He has been zealous over many years in emphasising the interim period before the decision on the development of new nuclear power.

3.45 pm

Lord Jenkin of Roding: Something has gone wrong with the electronics. I rely on the aural loop and at the moment it is making some pretty funny noises in my ear.

Lord Davies of Oldham: There is no guilty party, so let us all proceed in our innocence, although we are dealing with an extremely sophisticated issue. I was going to commend the noble Lord, Lord Jenkin, for the assiduous way in which he has addressed himself to the issue of the continuation and recruitment of expertise over recent years in the nuclear industry against the possibility that there would be a second

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wave of new nuclear reactors. Through that period, he identified necessary measures which the Government were concerned to continue, especially in courses being continued in universities enhancing the skills of those who were to take up those roles.

He referred to the need for the pay rates which obtain at present to be competitive. I am grateful to him for having recognised that an initiative has been taken on that very recently—as recently as last November, there was an increase in the salary of the NII's nuclear inspectors. The purpose of that was both to retain those who work so competently in that crucial field and to aid the recruitment of new inspectors, who will undoubtedly be needed against the background of the increased level of work that we all anticipate.

Reference has been made to the work of Dr Tim Stone. One purpose of his review is to consider how the inspectorate is equipped to review the new build proposals through the generic design assessment process. Another is how to enhance the culture of the organisation for it to be able to adapt to the demands of new nuclear build. I recognise the challenge.

The noble Lord, Lord Redesdale, introduced one obvious aspect of that: anxieties expressed by the French about their installation at Flamanville. Our perspective on what the French have done is that it showed the French inspectorate in rather a good light. It was quickly on to the issue; the French regulatory oversight proved to be effective. It highlighted very early the areas of potential weakness in the management of construction, seeking improvement.

There is no evidence of basic design weakness in the reactor, but nevertheless that was important, especially given, as the noble Lord, Lord Jenkin, mentioned, the increased level of co-operation envisaged, not least by President Sarkozy on his visit to the United Kingdom. We want to find ways in which co-operation can take place. That will not lead to the sharing of respective regulatory decision-making. That is a matter of national responsibility and the French would be no more keen on such shared responsibility than we are, despite the effusiveness of the President about co-operation during his visit to United Kingdom.

The regulators may come to different regulatory conclusions regarding the acceptability of aspects of the EPR design, but they will share experience and technical findings from the safety and security assessment of the EPR design during the licensing process. They will look at ways of dividing up assessment work on specific aspects of the design as well as looking for opportunities to exchange staff. We all recognise the advantages that that can potentially bring. In other words, the collaboration is not the shelving of national responsibility for the safety of our reactors, but the likelihood that we will achieve the challenging GDA completion targets more readily and thus give greater confidence that new nuclear power stations will be up and running in line with the clearly defined energy targets for which the nuclear programme is intended to make its contribution.

I assure the Committee that the regulators are recruiting to build up their capacity to manage the greater workload that is anticipated. They are investigating

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other measures to help manage GDA more efficiently, such as closer working with and secondments from overseas regulators, particularly the French, and increased use of technical support organisations for their work. These issues are all part of the Stone review on what needs to be done.

We welcome French involvement in nuclear build, and we welcome the opportunities that the President of France indicated should be taken up in terms of collaboration between the two countries on the guarantee of safety. But that does not alter the fact that the Committee is concerned with a Bill that will regulate the British industry, for which the British Government will alone be responsible. We will merely benefit from the contributions from elsewhere.

Dr Stone announced his initial findings of the review at the investors’ conference on 12 June. He identified a number of short-term measures needed to help the NII to recruit, retain and support, and recommended that a human resource firm be appointed to support current recruitment activities, although we all recognise that a crucial aspect in that is the level of remuneration offered. He wanted a review of the existing employment terms and reward structures, and recommended that management-level secondees should be appointed to provide support functions for the national inspectorate in order to allow inspectors to concentrate on the roles that they alone can perform. After all, they have specific expertise and, as we all know, it is relatively rare expertise. That is why recruitment is challenging, although it is going on apace. It is important that those who are recruited have their skills, expertise and abilities directed towards the primary job, which is inspection with regard to the safety of the design and implementation rather than broader management strategies. People with other skills may be employed to fulfil that role, which is what Dr Stone was concerned to emphasise.

The proposed amendment would place—

Lord Jenkin of Roding: Before the Minister moves on, I want to ask him about his reference to Dr Stone's interim report, published about a fortnight ago. When does he expect the final report, or will Dr Stone be involved in a continuing assessment? I can ask the question in different words if that would help.

Lord Davies of Oldham: No: I am grateful to the noble Lord. Whether Dr Stone will be employed continually may be a matter for later decision, but it is intended that following the interim report that has just been published, there should be a final report from him in the autumn. It will cover all aspects with which he has been charged, some of which he has been helpful in identifying himself as crucial issues to be considered.

I want to direct myself to the actual terms of the amendment, which, as noble Lords indicated, places an additional reporting burden on the inspectorate. The Government believe that most of the requirements of the amendment are already achieved through other means and we are concerned about the additional burdens that the report would place on the inspectorate.

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I want to outline the nature of reporting that is already undertaken on both the nuclear inspectorate resourcing and the generic design process. The information that would be provided as a result of the amendment is already produced by the Health and Safety Executive as part of its business strategy. Information on HSE and nuclear inspectorate resources is also published in the HSE annual report. In addition, the nuclear directorate of the HSE produces an annual plan of work that sets out how the directorate intends to conduct its work over the coming period. All of that information is available online. The committee will recognise that of all the many responsibilities that the Health and Safety Executive has, the nuclear industry is bound to be of paramount importance. We all know that it is more demanding in terms of safety than any counterpart area for which the HSE has general responsibility.

With regard to reporting on the progress of the generic design assessment, the regulators produce public reports on each design being assessed at the end of each step. Those reports set out the findings of the regulators on each design and set out areas for further work as the generic design assessment proceeds. That process is not, as we would expect, carefully monitored but is reported at regular stages.

It is also worth noting that with regard to reporting arrangements, as the nuclear inspectorate is part of the Health and Safety Executive, through the relevant Select Committee Parliament can require the Secretary of State for Work and Pensions to report to it on matters that fall within that department’s remit. That gives flexibility for Parliament without adding an unnecessary burden on the Government or the nuclear inspectorate. That is already a line of responsibility to Parliament.

Turning to the generic design assessment process itself, I am pleased to say that step 3 of the process is now under way. This phase looks at the design safety overview of a particular reactor. As part of the process, the nuclear inspectorate has created a process review board that provides external scrutiny of the assessment process and suggests areas for improvement for its next stage. To enhance the process further, the inspectorate is also seeking to build on relationships with overseas regulators, of which the French relationship that I identified earlier is of very great significance. Building on information from overseas regulators will improve the inspectorate’s understanding of the designs and allow regulatory decisions to be made in a timely manner.

I am not sure any joy is ever derived from anxieties with regard to the nuclear industry, but if any is to be derived from the anxieties identified by the noble Lord, Lord Redesdale, and to which the noble Lord, Lord Jenkin, made reference, it is the fact that we can learn from the experience of others relating to new build. In the same way as the inspectorate does, potential operators and vendors can also help the process by ensuring that the inspectorate receives timely, good quality submissions when requested. We expect that that will occur.

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