UK's nuclear clean-up industry in turmoil, report reveals

[cedric]

http://www.guardian.co.uk/environment/2008/jul/23/nuclearpower.energy

Chaos at the heart of Britain's nuclear clean-up industry has been laid bare by an internal audit undertaken by the Department for Business, Enterprise and Regulatory Reform (DBERR), following embarrassing cost overruns that forced the department to find £400m worth of emergency funds from other budgets to balance the books.

The department admits that there are now "inherent risks" associated with the financial affairs of the Nuclear Decommissioning Authority (NDA) and reveals that budgetary problems were exacerbated by misunderstandings, unminuted meetings and lack of sufficiently trained staff.

In response to earlier criticism from a parliamentary committee about its handling of the NDA, the department revealed that 42% of its budget is already being pumped the authority, which admitted last week its total future clean-up cost estimates were now £10bn higher than 12 months ago, when it put the figure at £73bn.

The job of overseeing the NDA has been moved from DBERR's energy group to its shareholder executive in an attempt to tighten up accounting, while the NDA has sent off its finance staff for retraining at the National School of Government run by the civil service, the report reveals.

The operational failures of the Thorp and Mox fuel recycling plants at Sellafield in Cumbria are known to be largely responsible for wiping millions of pounds worth of expected income off the NDA's budget, leaving it to seek more cash from government.

"The fact that the funding gap anticipated was met in part by using all of DBERR's end year flexibility, illustrates the extent to which the department is vulnerable to movements in the NDA's budget caused in large part by the reliance on volatile commercial income," says the department's report, entitled NDA budgeting shortfall 2007-08 lessons learned, which was quietly slipped out onto a parliamentary website this week.

The document, a response to a business and enterprise committee inquiry into NDA funding, reveals that the NDA and the Treasury were at cross purposes over some aspects of the clean-up agency's budget and decisions taken at a vital meeting as far back as February 2006 were misunderstood. This problems were exacerbated by the lack of proper procedures at those talks.

"There is no formal record of that meeting, nor was there subsequently any correspondence that confirmed what those present believed to have been agreed. To minimise the risk of misunderstandings in the future, all parties have acknowledged the importance of a written record of all material decisions and future actions," argues the report.

It also says that the government is currently looking at whether changes are needed to help the NDA manage its budget more effectively. It admits the "commercial income (from Thorp and Mox) is volatile and over time will decline as sites progressively close and move into the decommissioning phase."

The government has switched money meant to support low carbon and renewable technologies to clean up the waste from Britain's nuclear power stations.

Spending figures released by DBERR in February showed that at least one tranche of money - worth £15m - that was meant to be used on "sustainable energy capital grants" had been switched to the NDA. Ministers also plundered the defence budget as well as cash that should have been used for "regional selective assistance" to bolster an NDA.

The department said some money had been switched in the spring supplementary estimates for 2007-08 but insisted this was a technical matter just to balance the books on paper.

But as recently as two weeks ago there was a damning report from another House of Commons committee - responsible for public accounts - that criticised ministers for providing no certainty over the future cost of decommissioning Britain's existing nuclear sites - estimated at £73bn.

Edward Leigh, chairman of the committee, said: "Estimating costs far into the future is of course a precarious business but elements of cost that might be expected to be more predictable - such as the work expected to be undertaken over three next five years - have risen steeply."

The NDA's budget problems has also caused conflict with the Environment Agency which argued earlier this year that insufficient funds had been made available by ministers for the clean-up of some sites. The NDA was accused of making things worse by deciding to concentrate on especially toxic waste at sites such as Sellafield.

This prioritisation will delay clean-up elsewhere, "prolonging and potentially increasing risk to the environment that they pose and the costs necessary for their maintenance", the Environment Agency argued in a strongly worded response to an NDA's draft business plan covering the years 2008-11.

A follow-up letter from the agency's chief executive, Barbara Young, to her counterpart at the NDA , Ian Roxburgh, talks about stakeholder confidence being endangered by the decommissioning organisation's go-it-alone approach. She accuses the NDA of spurning offers of advice and claims that it has a shortage of environmental skills.

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