101.In this Chapter we consider the remit of and funding arrangements for the NNL.
102.The NNL is a Government-owned body, operating as a commercial business providing research, nuclear fission analysis and technology solutions to customers in the UK and overseas. Although it is owned and operated by the Government, it receives no direct Government funding but instead delivers products and services on a commercial basis to customers—most notably Sellafield Ltd (owned by the Government through the NDA), EDF Energy and the Ministry of Defence (the latter delivered via a contract with Rolls-Royce). Its turnover—around £100M per annum—comes entirely from customer funded projects. The NNL re-invests any surplus generated from commercial work into R&D programmes, facilities development, skills and policy advice to the Government. Its written submission to us emphasised that its “input and advice are always based on robust scientific and technical analysis, and are independent of Government policy.”
103.The NNL describes its mission as:
“To be the key UK civil nuclear fission R&D provider by:
104.We heard considerable praise for the staff and work of the NNL. Prof Tynan had found the NNL to be “supportive, collaborative and professional”. The Cambridge Nuclear Energy Centre praised the knowledge and experience of the staff and Prof Hyatt said it was making a positive contribution to the overall UK strategy and research effort. Mr Norman said it was a great success.
105.Whilst the work and staff of the NNL were widely praised, our evidence was overwhelmingly critical of its remit and its current funding and governance model. On the one hand it is a Government-owned laboratory with publicly owned assets; but on the other hand it is also a commercial organisation, competing with many private companies.
106.This criticism was concisely expressed by Professor Chris Grovenor, Professor of Materials at the University of Oxford:
“As currently constituted the NNL can operate neither as an independent advisor to the government on nuclear strategy nor as the leader of research to support the UK’s future energy policies. This is because the current funding (or more properly lack of funding) model means (a) that it has to generate most of its income from contract research, so it is beholden to those funders and cannot generate a truly independent view, and (b) that a world leading research culture cannot be built when the priority is servicing short term, low level research contracts to earn a living.”
107.The tension between the two main arms of its work can, we heard, make it difficult for stakeholders to work with the NNL. The Cambridge Nuclear Energy Centre claimed that the short-term commercial imperatives under which the NNL scientists and engineers worked made it difficult and expensive to work with the NNL and provided compelling, specific examples to illustrate this. NSG Environmental Ltd, a company providing specialist R&D services to the nuclear industry, told us that the NNL has a reputation for being late, expensive and poor quality compared with the competition.
108.Dame Sue Ion claimed that the NNL’s present commercial funding and governance model prevented it from fully acting to support future national energy policy. In paragraph 96 we noted that it seemed that the Government had not sought the NNL’s advice on moving into the SMR market.
109.The NNL defended its hybrid model (a national lab providing impartial advice to the Government, yet also a commercial provider of services to the nuclear sector). It acknowledged that it had sometimes led to a perception of confusion of mission or of a hampered ability to deliver the remit. But the NNL told us that the model brings considerable benefits including:
110.We heard that the NNL’s funding and governance model compared unfavourably with that of the national nuclear laboratories of other nuclear nations and that this could create difficulties in international work.
111.Professor Grovenor said that the NNL was not funded to undertake the full range of activities one would normally associate with an organisation called the National Nuclear Laboratory.
112.The Centre for Nuclear Engineering at Imperial College London told us that other countries, particularly those with nuclear programmes of their own, “possess national laboratories free from this narrow commercial focus, with a full spread of capabilities necessary for the support of nuclear activities. They are able to deal with the unique challenges of nuclear research (active materials, licensing, security and safeguards, etc) and engage with industry and academia, in particular with regard to facilities access.” Moltex Energy, a UK reactor developer, went further and told us the NNL is not remotely comparable in scope, capability or mission to other national nuclear laboratories and that the UK currently lacks any organisation capable of taking on a comparable role to the Canadian and US laboratories.
113.The NNL itself said that its commercial operating model, which recycles earnings into national laboratory activities with no direct Government funding, is unique. Prof Howarth said that whilst the NNL was different from overseas national nuclear laboratories in terms of its operating model, nonetheless it fulfilled many of the same functions as the overseas organisations.
114.Perhaps it is a consequence of its wholly commercial method of operation but it emerged in questioning that the NNL makes little or no use of advisory groups with members from abroad to steer its policy.
115.We received several suggestions for improvement to the NNL’s funding and governance model. Prof Lee said that he would, “merge [the] NNL with the Culham Centre for Fusion Energy (CCFE) [the UK’s national laboratory for fusion research which is owned and operated by the UKAEA] under a UKAEA type umbrella organisation bringing fission and fusion research together. This would align the NNL’s industrial context and contacts with CCFE’s world leading research and infrastructure (e.g. MAST and JET).”
116.UKAEA were not in favour of such a merger:
“The two organisations’ present missions are substantially separate such that merger would not be beneficial, at least in the short/medium term. UKAEA is … focussed on R&D, while still supporting the industrial supply chain to win and deliver commercial work in fusion. [The] NNL … is far more commercially-oriented, with a much smaller R&D programme. Furthermore, [the] NNL is focussed on fission technologies, largely focussed in near-term operations and decommissioning. UKAEA meanwhile, is focussed on fusion and looking to a future reactor market. … Finally, it would be unwise to seek to implement a change of status at present given the very large perturbations that exiting Euratom will incur for UKAEA (and to a lesser extent [the] NNL).”
118.As explored in earlier paragraphs, there was agreement amongst most of our witnesses that the NNL’s remit was having a negative effect on its work and relationships with stakeholders, including Government departments. Several suggested that the remit and model of the NNL should be reviewed.
119.Nuclear AMRC said that the remit could be clarified because its commercial and public functions can sometimes come into conflict and displace each other. Given the impact this could have on the NNL’s customers, Nuclear AMRC recommended that this risk should be reviewed and addressed. Prof Hyatt agreed that the possible tension between the two arms of its work warranted a review.
120.Some witnesses pointed to the National Physical Laboratory (NPL) model as a possible template for the NNL. The NPL is the national measurement standards laboratory which provides the scientific resources for the National Measurement System (financed by BEIS). The NPL also offers a range of commercial services, applying scientific skills to industrial measurement problems. Like the NNL, it provides a service to the Government alongside its commercial activities. Unlike the NNL, it receives Government funding.
121.Professor Grace Burke, Director of Materials Performance Centre at the University of Manchester, suggested that “in an ideal world it [the NNL] would be solely funded and not have to rely on soliciting commercial contracts.” Mr Orr agreed that if the Government wished the NNL to play a role as a formal adviser, it would require funding. Lord Hutton also pointed to the need to resource properly the NNL if the Government wants it to have an advisory role and to be a source of independent advice to government. Dame Sue Ion told us there was a case for provision of core funding to the NNL.
122.We asked the Government whether the NNL should receive core funding. Mr Lucas said the Government was actively considering this issue.
123.In 2011 we heard evidence from the then Chief Scientific Adviser at DECC, Professor David MacKay. We asked him whether he thought that DECC should be giving funding to NNL, he said that the arguments for doing so were “strong”. We concluded that providing NNL with a modest sum of money to fund strategic research of national importance need not, in our view interfere with its ability to generate money through commercial contracts, as other national laboratories do. It would, however, allow it to carry out R&D of national strategic need that is not commercially viable, which at present it is not able to. We stand by this conclusion.
124.The NNL is well-placed to be a source of independent advice to the Government and to support and deliver research and development in the UK nuclear sector. To do this properly, it will require dedicated core funding. Whilst acknowledging the current climate of financial stringency, we urge the Government to give early consideration to providing modest funding to the NNL commensurate with that provided to other UK national laboratories and similar bodies.
118 Written evidence from the NNL ()
120 (Prof Mike Tynan)
121 Written evidence from Prof Neil Hyatt ()
122 (Jesse Norman)
123 Written evidence from Prof Chris Grovenor, University of Oxford ()
124 Written evidence from the Cambridge Nuclear Energy Centre ()
125 Written evidence from NSG Environmental Ltd. ()
126 Written evidence from Dame Sue Ion ()
127 Written evidence from the NNL ()
128 Written evidence from Prof Chris Grovenor, University of Oxford ()
129 Written evidence from the Centre for Nuclear Engineering, Imperial College, London ()
130 Written evidence from Moltex Energy ()
131 Written evidence from the NNL ()
132 (Prof Paul Howarth)
133 Written evidence from Prof William E Lee ()
134 Written evidence from UKAEA ()
135 Written evidence from Nuclear AMRC ()
136 Written evidence from Prof Neil Hyatt ()
137 In 2016 BEIS contracted work with NPL to a value of £54 million related to the UK’s National Measurement System; maintenance and development of the core capability and activities to deliver impact directly to beneficiaries. Although single tender, the work was contracted and not grant-funded. All other revenue for NPL (£35 million from national and international, public and private sector customers) was competitively bid for and won. In the same year BEIS charged £14 million in rent for the NPL site—hence the net cost of the NPL’s work to BEIS was £40 million.
138 (Prof Grace Burke)
139 (David Orr)
140 (Lord Hutton of Furness)
141 (Dame Sue Ion)
142 Science and Technology Committee, (3rd Report, Session 2010–12, HL Paper 221), para 247