Funding for clean-up of nuclear sites is unsustainable, say MPs

Monday, April 7, 2008

The way in which the £73bn clean-up of Britain's nuclear sites is funded is unsustainable and in urgent need of reform, the government is warned today.

More taxpayers' money is also likely to be required to finance the Nuclear Decommissioning Authority (NDA), according to the cross-party business and enterprise committee of MPs.

"We believe nuclear decommissioning is too important to be left to the mercy of changing priorities in the Treasury and uncertain commercial income and we urge the government to begin work to resolve this issue urgently," said the committee chairman, Peter Luff.

Earlier this year, the National Audit Office warned that decommissioning work on some sites was being hampered by changes to funding which had been introduced at short notice and that the costs of the work were rising rapidly.

The committee began its investigation into NDA funding after the Department for Business, Enterprise and Regulatory Reform asked in February for an extra £400m to fund the authority in the financial year ending in March. The committee expressed surprise that such a request had been made so late. It noted that the NDA's funding is a mixture of grant and commercial income and that its 2007/08 budget had been set at £2.79bn.

The committee said it believed the current funding model was "unsustainable". "We note the department's assurances that a solution has been found for the current comprehensive spending review period. However, in view of the volatile - and declining - nature of the NDA's commercial income, we are sceptical about how watertight such an assurance can be."

The NDA was set up in 2005 to oversee the clean-up of 18 nuclear sites.

Luff said: "Having initially called the NDA in to question the request for a last-minute, one-off payment, we found much of the difficulty was caused by the funding model itself."

The committee said the NDA absorbed a large part of the business department's budget, and expressed concerns about the effect the cost of the nuclear clean-up might have on other areas of the department's work.

Anti-nuclear campaigners are likely to seize on the report as fresh ammunition to attack the government's plans to encourage new nuclear build in the UK.

However, the committee stressed: "We emphasise that none of the issues raised should have any consequences for the construction of new nuclear power stations. Separate funding arrangements are being developed for their decommissioning."

Mike Graham, national secretary of the union Prospect, which represents 15,000 scientists and engineers in the nuclear industry, welcomed the report, which he said echoed concerns that the union had been expressing for many months.

"It takes many years to fully decommission a plant. But how can industry have the confidence to commit to the process when funding is constrained to three-year cycles? The NDA needs to be confident of a clear funding stream that will run over the long term."

Graham said the union recognised the many other competing demands on the Treasury. However, decommissioning was one of the biggest challenges facing the country and he urged the government to look at alternative funding strategies.

"The current NDA financing model cannot be relied on. Each change to the programme not only extends the overall bill to the taxpayer but has a devastating effect on the supply chain of contractors and other local stakeholders, with a resulting loss of confidence in the whole industry, including any potential new build."

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