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Where a new nuclear power station is proposed, existing arrangements will allow local authorities to be involved in that process. In the future, when the independent Infrastructure Planning Commission is established through the Planning Bill, which is in another place as we speak, local authorities will continue to be consulted on the proposed development prior to construction. The local authority will be able to scrutinise all relevant aspects of the proposal, such as the impacts of transport and traffic flow.
4.30 pm
Later, were a change to occur to a power station, for example, following a modification to a decommissioning plan, and that change amounted to a “development” within the meaning of the planning legislation—such as constructing or demolishing a building—then planning consent would be required and at that point the local authority would again become involved. However, there may equally be modifications which do not constitute a “development”—that is, they would not have an impact on the local community—and in those instances the local authority would, quite rightly, not need to be consulted. In other words, getting the appropriate involvement is important. We think that that is rightly through existing processes and not through the framework established under the Bill.
I believe it is appropriate that the Bill grants a statutory role only to the bodies that have a responsibility for health and safety, security and environmental matters. In our view, there is already the right balance of formal and informal consultations with local authorities to deal with concerns that they might have regarding a nuclear power station in their community. We think that the Bill as drafted strikes the right balance.
Local authorities and local communities are of course represented on British Energy and NDA site stakeholder groups, and we would expect new nuclear power stations to be similarly involved in local communities. These are important forums; they help to establish long-term relationships between local residents and operators of nuclear power stations throughout the lifetime of a plant.
Lord Redesdale: Do those forums have a statutory basis? If the nature of the relationship, set out in the Bill, between the companies and the local authorities changes, they may no longer have any relevance.
Lord Bach: As I understand it, they do not have a statutory basis. These are the engagement activities that the NDA and British Energy currently undertake with local communities. Before I sit down, I shall have a response for the noble Lord about what may happen in the future.
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Amendments Nos. 42 and 45 affect the NDA. They propose that, similar to the position for local authorities, the Secretary of State should statutorily consult the NDA in relation to a funded decommissioning programme. However, because the NDA’s functions are different from those of the interested bodies, we believe that the amendments relating to consultation with the NDA do not align with the intended purpose of requiring the Secretary of State to consult the Health and Safety Executive and the environment agencies.
The requirement to consult the nuclear regulators is there to ensure that any programme, or modification to a programme, meets the health, safety, security and environmental requirements of the relevant regulator. Frankly, including the NDA in that as a statutory consultee would have no impact on this process, because the NDA has work within the regulatory framework set by the regulators. It primary activity is to decommission the public nuclear legacy programme at 19 designated sites and to progress work on the geological disposal facility.
In relation to waste and new nuclear power stations, the Managing Radioactive Waste Safely White Paper, published earlier this month, confirmed that the NDA will be the implementing body for the geological disposal of higher-activity nuclear waste. In undertaking that responsibility, the NDA will have to work within the constraints required by the nuclear regulators. For example, the waste acceptance criteria that the NDA will set for the geological disposal facility will involve input, and ultimately approval, from the regulators.
Only operators who package their waste to meet the waste acceptance criteria will be able to dispose of their waste in the facility. Therefore, developers will have to propose in their decommissioning programmes to package waste in a manner consistent with these criteria. Because the regulators will consent to the waste criteria, if any proposed programmes or modifications are inconsistent with them, the regulators will be able to register their concerns through the existing provisions of the Bill.
In short, we do not believe it is necessary to make the NDA a statutory consultee as well. The existing arrangements are sufficient to ensure the engagement of the authority where that is necessary. In addition, as an agency of my department, we are already in regular contact with the NDA and if the Secretary of State required any additional specific information, he could request it through the normal channels of government.
I turn now to Amendments Nos. 42 and 54, which relate to the Committee on Radioactive Waste Management. CoRWM’s primary task will be to provide independent scrutiny of the Government’s and the NDA’s proposals, plans and programmes to deliver geological disposal, together with robust interim storage, as the long-term management of the UK’s higher activity wastes. CoRWM’s role in relation to individual funded decommissioning programmes is analogous to that of the NDA; that is, it is strategic and not at the individual programme level. Given our policy on the disposal of waste, CoRWM will play an important independent oversight role in relation to new nuclear
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The structure and remit of CoRWM reflects the fact that to maintain its independent position, CoRWM itself cannot be part of the implementation machinery, neither should it assume any of the constitutional roles of government or the statutory roles of either the NDA or the independent regulators.
I want to take this opportunity to highlight briefly the other oversight mechanisms that we are putting into place. Where we approve or reject a programme, or a modification to a programme, the Secretary of State will be able to rely on the verification of detailed technical information and advice from the nuclear liabilities funding arrangements board—to be called, I understand, NLFAB—
Lord Jenkin of Roding: Could the noble Lord say that again?
Lord Bach: I shall try—the nuclear liabilities funding arrangements board, known as NLFAB. Information will also come from trustees of the independent fund and other related specialists. The board is being set up to provide the Secretary of State with the right level of technical and financial scrutiny. It will be thorough and the advice provided by it will be made public.
I have spoken for long enough on these amendments. However, I need to come back to the noble Lord, Lord Redesdale, and the question he put to me about local engagement groups. We expect that the developers of new nuclear sites would want to form similar groups. They make good sense, especially in terms of enhancing public acceptance of what is going on in the interests of the developers themselves as much as anybody else. I want to stress that energy companies and we in government remain committed to openness and transparency in the development of new nuclear power stations through local community involvement.
For the sake of completeness and in case I got it wrong—I did—I point out that NLFAB stands for the Nuclear Liabilities Financing Assurance Board.
I am afraid that I have to disappoint the noble Baroness yet again in not accepting these amendments.
Baroness Wilcox: I thank the noble Lord, Lord Bach, for his response, and I thank the noble Lord, Lord Redesdale, for his support. I understand that the noble Lord, Lord Bach, will not give me what I would like; however, one learns along the way every time that nothing is ever really wasted. From this exchange I have had a clarification of the role of the NDA, which is helpful; I thank the noble Lord. I have clearly heard the government attitude towards, and the diminishing role of, local authorities—and I have not heard that previously. I shall read the debate carefully. For now, of course, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
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Clause 45 [Modification of approved programme]:
Lord Jenkin of Roding moved Amendment No. 43A:
- “and any such modification may either increase or reduce the amount of money specified in the funded decommissioning programme.”
The noble Lord said: Those who took part in the Second Reading will remember that I spoke at some length about the arrival on the scene of an American company called EnergySolutions. I gave the noble Lord, Lord Jones of Birmingham, notice that I would refer to it and after the debate he drew me aside to say two things: first, to express his gratitude that I had warned him that I would talk about this company, but he went straight on to say, “I think it would be very helpful if you were to meet some of my officials” to discuss matters arising from my speech. I had had such a meeting previously, which the noble Lord, Lord Jones, had suggested, on a different matter and I therefore readily agreed. Indeed, we have now agreed to a meeting at 1 Victoria Street, at which I hope to discuss these matters.
One of the points that I sought to make in that reference to this rather remarkable American company, based on the information that it has been kind enough to give me, is that it has an approach to decommissioning and waste disposal that in some respects differs from that which has been seen to be the accepted norm in this country. It occurred to me that the firm was asking people to think out of the box. At my subsequent discussions with EnergySolutions, I believe that that is what it seeks to do. It has held discussions with various regulators in this country, which are ongoing.
This matter suggested to me that the circumstance may arise when a company has set aside funds for decommissioning and its share of waste disposal—I shall come in a moment to the question of what is meant by “its share”—and it appears subsequently that the funds that that company has set aside are considerably higher than will actually be necessary. Technology advances, and EnergySolutions believes that it is at the forefront of technological advance in this field. Indeed, it has made a number of innovative approaches to this whole issue. The noble Lord, Lord O’Neill, was quite right to interrupt me in my speech to say that this will be required not only to be subject to regulation in this country, which is right, but to go through the normal testing and contracting system.
EnergySolutions already has a substantial contract with the Nuclear Decommissioning Authority for a number of the Magnox stations in the south of the country; so the company is not completely unknown to the authorities here.
If I had been more accurate I would have tabled the amendment to Clause 46, which is the one where the Government can respond to a proposal to modify an approval. Clause 45 is where someone can approach the Government for a modification, and Clause 46 is the process to be applied when that happens. I therefore have a question for the noble Lord, Lord Jones—and I express our wish that he may be restored to health.
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Lord Jenkin of Roding: He is? Good.
Lord Davies of Oldham: No, I was merely agreeing with the noble Lord that I hope my noble friend will be restored to health. I was not saying that that had happily happened yet.
Lord Jenkin of Roding: I am sorry to hear that. We hope to see him before Committee stage is over. The advantage is that we have the pleasure of the presence of the noble Lords, Lord Bach and Lord Davies of Oldham.
The amendment sprang from what I had told the noble Lord, Lord Jones, I was going to talk about, and what I talked about at Second Reading. The question is, if you have a contractor who is able to come along and say, “Look, I can do this at significantly lower cost than you perhaps have thought would be necessary”, is it then open to the company that has set aside funds for decommissioning and waste disposal to go to the authorities and say, “We don’t think we’re going to need all this. We envisage arrangements that could be substantially less than that”?
What is meant by “the full share of costs”? There was a meeting upstairs a month or six weeks ago, addressed by the Minister for Energy, Malcolm Wicks, who had with him a senior official in the department. I raised that question, which had been put to me by one or two of the companies. It has been part of the Government’s proposal that all the costs of dealing with the legacy waste fall to the authorities—that is, to the Government—and huge estimates of those costs have been made so far, while the new-build companies would be required only to bear their share of the additional costs occasioned by the waste that they will produce. Some of them had wondered whether the full share meant that they would have to pay the full share of the total cost or only of the additional cost. On that occasion, and those who were there may remember this, I got different answers, one from the Minister and one from the official. I said after the meeting to Mr Wicks, “I think you’ve got to sort this out before the Bill comes to the Lords, because I shall certainly want to raise the matter there”.
As I understand it, and perhaps the Minister will be able to correct me if I am wrong, it is intended that the costs that a new-build company will have to provide for will be the costs of disposing of the waste that it produces and the additional infrastructure costs that that waste would occasion. I do not think there is any intention that the new-build companies should make any other contribution to the total cost of the repository. Perhaps the Minister will have a form of words that can put that beyond doubt; if not, we shall have to return to this at a later stage. There is clearly still some uncertainty out there about what is meant by “the full share”. There was discussion of it in the nuclear White Paper. I shall not bother to read the whole paragraph, but paragraph 2.132 says that some people have,
- “questioned the meaning of the reference to the ‘full share of costs’ in the consultation document”.
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The question then was whether that means simply by volume or by the level of radioactivity, which is another issue. I want to be quite certain that the new-build people are not going to be required to bear any of the costs which would fall to the authorities under the legacy programme and that they will be responsible only for the additional costs that their waste will occasion.
Another point that arose from the White Paper is that the Government are very keen that they should learn from international experience. EnergySolutions is a good example of a company with international experience in this area and therefore ought to be listened to. The White Paper goes on to the issue of the setting aside of funds. We have heard about the Nuclear Liabilities Financing Assurance Board, also referred to in the White Paper.
I wanted to see what is meant by all this. I do not know if noble Lords have had a chance to look at the consultation paper published last February entitled the Consultation on Funded Decommissioning Programme Guidance for New Nuclear Power Stations. Apparently, what is envisaged is that the sum required to be provided in this funding has a significant risk premium in order to cover the possibility that the costs may be higher, and that the advantage would be that companies could then be certain that they would not be asked for more if it turned out that in the long run the costs were much higher. However, paragraph 2.10 states:
“Should the actual costs of providing the waste disposal service prove lower than expected, these lower costs will not be passed on to nuclear operators”—
and says by way of reason for this—
- “who would have gained from certainty of a fixed price and would not have been exposed to the risk of price escalation”.
I understand the logic, but one has to ask what advantage it is to the industry if someone innovative and with international experience—I said that a moment ago that the Government want to see—comes along and offers a significantly lower cost for the disposal of waste. There could also be a lower cost for decommissioning so that the sums that have been set aside are in fact higher than will be required. What happens then? Would it not be fairer in those circumstances, so as to encourage competition and the reduction of costs, if the companies that had been asked to make this provision to be monitored by NLFAB actually enjoyed some of the advantage of it?
My amendment is a peg on which to hang the argument and I do not suggest for a moment that in its present form it could be added to the Bill, but I have raised two questions of substance. First, what is meant by “their share of the costs” and does it include any possible share of the costs of dealing with the legacy waste; and, secondly, is it really the case that the Government intend that companies which can negotiate with an innovating international company, if I may put it that way, to achieve a substantially lower cost are to derive no benefit at all? I beg to move.
Lord O'Neill of Clackmannan: I thank the noble Lord for the amendment because it gives the Government the opportunity to clarify certain matters. It has to be said that in the intervening period since his first discussions
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I am looking through my mental notes as I speak but my impression is that the companies that run the power stations—the ones that are in first—will probably have to pay a bit more, and in effect they will probably charge more for their electricity, but as their expertise and experience are developed, so they will benefit from lower costs. Therefore, over the lifetime of this project—I admit that it is a very long lifetime—it is likely that the costs will even out. It is not certain that the new investors in new-build power stations will necessarily be punished in perpetuity because over time the costs will even out.
I realise that, although I have declared interests in the register, I have not declared them here and I am not sure whether I should have done so. I act as an adviser to the Washington Group and I am the chairman of the Nuclear Industry Association, so I think that I should put that on the record.
The noble Lord, Lord Jenkin, raised questions concerning the company that will carry out the clean-up work, but that will depend on the terms of the contract that the NDA enters into with it. However, I understand that a number of companies—I do not refer just to the one which employs me and to which I give assistance—have said, “We think that, once we get into the operation, we will be able to discover economies. We will be able to change the nature of the work pattern, which may well have stood BNFL in good stead in the past”. Indeed, it could be argued that as BNFL’s functions are being removed and it is being dismantled, it has not been that successful in a number of areas. However, if the new companies are successful—as has been said, some of them have extensive international records of achievement—they may well find that, because of their commercial acumen, they are able to create elbow room, which enables them to take on additional work and derive benefit from that. Frankly, the concept of doing the job for less than had been anticipated is only one part of this. In some respects, doing the job for less money merely liberates resource, which affords opportunities for investment in other matters related to the broader contract, meaning that the work can be done that much more efficiently and quickly. Therefore, there is an element of internal dynamics in the financing
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