Nuclear clean-up costs’ review

Nuclear clean-up costs’ review

By Jean Eaglesham, Chief Political Correspondent

Published: April 6 2008 22:55 | Last updated: April 6 2008 22:55

Ministers on Sunday pledged to review how the £73bn liability for cleaning up the UK’s nuclear waste stockpile will be funded, after MPs warned the existing arrangements were “unsustainable” and in need of urgent change.

The annual burden of about £1.5bn on the taxpayer for dealing with waste will “almost certainly have to increase significantly in the coming years, over and above current plans”, said the Commons business committee in its report.

The Nuclear Decommissioning Authority, the agency responsible for dealing with the waste legacy, is funded by a roughly 50:50 mix of commercial income, mainly from reprocessing, and government funds. The state money, allocated in the three-year spending round to the Department for Business, Enterprise and Regulatory Reform already accounts for more than 40 per cent of the department’s spending limits.

“It is likely that this public funding will have to increase still further,” the MPs said. The estimated cost of cleaning-up the stockpile has risen by 30 per cent in less than four years, from £56bn in June 2003 to £73bn in March 2007. Moreover, the agency’s commercial income is due to decline in future, as Britain’s ageing nuclear fleet is wound down, ceasing altogether by 2022.

The department has been assured by the Treasury that its budget will be protected from any increases in NDA funding in the existing spending round. But the committee suggested this was not a satisfactory solution to future funding of waste.

“In view of the volatile and declining nature of the NDA’s commercial income, we are sceptical about how watertight such a [Treasury] assurance can be,” the report said. It warned that the scale of the funding involved meant it would be “completely unacceptable” for funding problems at the NDA to result in cuts in other departments for business spending.

The committee criticised the “failure of communication” within Whitehall that led to the department having to suddenly request an extra £400m to fund the NDA in the 2007-08 tax year, mainly because of a disagreement over the accounting treatment of some commercial contracts.

The MPs urged the government to start “urgently” on a new system of funding. “Nuclear decommissioning is too important to be left to the mercy of changing priorities in the Treasury and uncertain commercial income,” Peter Luff, the committee’s Tory chair, said.

The department said the funding arrangements for the clean-up had “worked to date” but the government agreed it was “time to review the model”.

The government said it was “pleased” the committee had stressed that its concerns had no implications for the plans to build a new generation of nuclear power stations. A fund is being set up to cover the costs of waste from these new reactors, which ministers insist will be fully funded by the industry.