Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) Regulations 2018

Tuesday 22nd January 2019 Lords Chamber

Motion to Approve

16:25

Moved by

[Lord Henley]

That the draft Regulations laid before the House on 29 November 2018 be approved.

Relevant document: 9th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B)

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, I was going to move this and the next set of regulations jointly, as set out on the Order Paper. However, I received a request from the noble Lord, Lord Adonis, and I am grateful to him for giving notice that he would find it more convenient if we dealt with them separately. I am more than happy to comply with that request. Therefore, we will debate these regulations and then, I hope, as I seek to earn my sweeties from the sweetie cupboard, we will move on to the final Motion in my name.

There are two sets of related regulations being considered today, each requiring a separate vote— that is possibly why the noble Lord, Lord Adonis, would like us to have two separate debates. The Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) Regulations define the terms “fissionable material” and “relevant international agreements” for the purpose of the sections of the Energy Act 2013, as amended by the Nuclear Safeguards Act 2018. These terms are used in the related Nuclear Safeguards (EU Exit) Regulations 2018, which will be considered in due course, and set out the detail of the legal framework for our new domestic safeguards regime.

I begin by emphasising that the two sets of regulations are essential to establishing our domestic regime whether we leave the EU with a deal or not. The powers to make this secondary legislation are found in the Energy Act 2013, as amended by the Nuclear Safeguards Act 2018. The territorial extent and application of these regulations is England, Wales, Scotland and Northern Ireland.

Nuclear safeguards are accounting, reporting and verification processes designed to assure and demonstrate to the international community that civil nuclear material is not diverted unlawfully into military or weapons programmes. As was made clear during the passage of the Nuclear Safeguards Act, nuclear safeguards are separate and distinct from nuclear safety and nuclear security.

The nuclear industry is of key strategic importance to the United Kingdom and our departure from the EU in no way diminishes the ambition that we have set out in the nuclear sector deal. The UK has a long and distinguished record as a responsible nuclear state and was a founding member of the International Atomic Energy Agency in 1957. The IAEA ensures that states are honouring their international legal nuclear safeguards obligations in connection with the Treaty on the Non-Proliferation of Nuclear Weapons, the NPT. While not bound by the NPT, the UK has voluntarily accepted the application of two safeguards agreements with the IAEA: a voluntary offer agreement and an additional protocol, as defined in these regulations. These bilateral agreements will replace the trilateral safeguards agreements between the UK, the IAEA and Euratom, and ensure that we continue in our role as a responsible nuclear state when Euratom arrangements no longer apply. The ratification of these agreements was approved by Parliament at the end of last year.

To enable continuity of civil nuclear trade with our international trading partners, the Government have prioritised having in place nuclear co-operation agreements with Australia, Canada, Japan and the USA, as required by these countries. NCAs are legally binding treaties that allow states formally to recognise their willingness to co-operate with each other on civil nuclear matters.

16:30

The UK has now concluded, and the UK Parliament has now approved, the ratification of these new bilateral NCAs with Australia, Canada and the US. The new bilateral NCAs will replace the NCAs that these countries have in place with Euratom, which the UK currently benefits from as a member state. The UK already has a bilateral NCA with Japan.

I want to reiterate the Government’s commitment to establishing by December 2020 a regime that will be equivalent in effectiveness and coverage to that currently provided by Euratom, and which will exceed the commitments that the international community expects the UK to meet. Our approach is to establish a regime that will operate in a similar way to the existing arrangements, taking account of best practice in UK regulation-making and considering the need to minimise disruption to industry. Both the Euratom regulations and the nuclear safeguards regulations are structured to require information concerning nuclear safeguards to be supplied to the relevant entity, whether the Commission or the ONR, which the regulator may then forward, as appropriate, to the IAEA.

My department held a consultation on the content of both these and the nuclear safeguards regulations between July and September last year. In total, 28 formal responses were received. A government response to the public consultation was published on 29 November, summarising the comments received. Responses to the consultation did not suggest any major changes to these regulations.

The term “fissionable material” forms a component of “qualifying nuclear material”, which is defined in the Energy Act 2013 as amended by the Nuclear Safeguards Act 2018. The definition of fissionable material in these regulations has been based on the definition of “special fissionable material” in paragraphs 1 and 2 of Article XX of the IAEA statute, on definitions.

The second term that these regulations define is “relevant international agreements”, which are defined to include six agreements. The first two were signed on 7 June 2018 and are between the UK and the International Atomic Energy Agency. They take the form of the main agreement together with an additional protocol. The other four agreements are three new bilateral NCAs between the UK and the US, Canada and Australia, which were signed in 2018, and an existing bilateral agreement between the UK and Japan, signed in 1998.

The definitions in these regulations are important, as are the nuclear safeguards regulations that this House will consider shortly, and will apply to qualifying nuclear material, including fissionable material, as defined in these regulations. I therefore commend them to the House.

[Lord Redesdale (LD)]

My Lords, I wrote only one speech to the two SIs, so I will make only one—do I get a sweetie as well? These provisions seem necessary. The Minister mentioned that NCAs had been signed with a number of countries. Does there need to be an NCA with Euratom itself if it is representing European countries? There seems to be no mention of that in the Explanatory Notes.

Obviously, these regulations will need to come into effect, but it is rather unfortunate that we are looking at the demise of the nuclear industry at the moment. Only Hinkley Point C, the last of the new nuclear fleet, may be built, and that is in jeopardy as well.

[Lord Adonis (Lab)]

My Lords, these are highly technical regulations and all I have to go on in seeking to scrutinise them is the debate that took place in the House of Commons on 14 January. On the issue of bilateral agreements with other nations, which are clearly vital to the handling of this nuclear material, the Minister, Richard Harrington, gave a comprehensive assurance that exactly the same agreements would be in place after 29 March as before. So that concern, which had been raised in the House of Commons, has been met.

However, in his concluding remarks, the Minister said:

“The nuclear safeguards regulations will also require operators to provide additional nuclear safeguards information to the ONR”—


the regulator—

“on qualifying nuclear material, and to the Secretary of State on certain non-nuclear materials”.—[Official Report, Commons, Third Delegated Legislation Committee, 14/1/19; col. 5.]

It was not clear to me whether that is a significant statement or an insignificant statement because it depends on what additional material they will be required to make available to the ONR and the Secretary of State. Can the Minister tell us the nature of the additional information that will have to be made available to the ONR, and why, in the event of no deal, additional information needs to be made available to the ONR over and above what needs to be made available now? Those in the industry who are reading accounts of our proceedings may be quite keen to understand that issue.

[Lord Grantchester (Lab)]

My Lords, once again I thank the Minister for his introduction. Although the regulations have been decoupled, my remarks, like those of the Minister, were in a comprehensive single form, but I am happy to bring forward one or two questions on these regulations.

These new regulations on fissionable material conform to and appear to be equivalent to those pertaining under Euratom. This is important for our international agreements and for confidence that the UK takes its responsibilities on nuclear safeguarding very seriously. Regarding the international agreements, it has been encouraging to see the confirmation of new NCAs with the US, Canada and Australia. The Minister will recall that anxieties were expressed during the passage of the Bill that it might not be possible to achieve them. Can the Minister allay any fears that may arise over Japan? I understand that there is already a historic agreement with Japan going back to 1998. Discussions to review it have been mentioned. Is it only a formality that talks are going on with Japan concerning the UK’s confirmation on leaving the EU? Will the Minister settle any anxieties about the time it seems to have taken to review this with Japan when the other three nations have already agreed the NCAs, and allay any misgivings that may have arisen following any issues in discussions with Japan concerning new nuclear investments in north Wales?

The consultation seems to have been extremely productive. The recommendations have been taken on by the department and the regulations have been amended to be consistent with those discussions.

[Baroness Altmann (Con)]

I hesitate to participate in this debate, given that this is a very complex issue, but I imagine that members of the public and the industry would wish to be assured that the House is scrutinising issues of such significance from the point of view of public safety. I note that the Secondary Legislation Scrutiny Committee drew these draft regulations to the attention of the House in view of the important issues of public policy.

I note from the committee’s report that there will be ways in which our nuclear safeguards will be deficient after March 2019 relative to Euratom, notwithstanding that they meet international obligations. I would be grateful if my noble friend could help the House understand in what way those deficiencies will manifest themselves in the event that we leave with no deal or, if we leave with a withdrawal agreement, during the interim period—before, as I understand it, our standards will meet the Euratom standards by the end of 2020.

[Lord Henley]

My Lords, I hope that I can deal with most of the points that have been made in the debate by noble Lords. If I miss any, perhaps on Regulation 4, we will be able to catch up on them. The noble Lord, Lord Redesdale, said that he had only one speech for both sets of regulations but I am sure that he will want to come in again if I fail to address his points.

First, the noble Lord asked whether we needed an NCA with Euratom. I can give an assurance that an NCA is not required for these regulations. Secondly, he regretted what he described as the demise of the nuclear industry. It is sad that last Thursday we had to make the announcement that I think he was referring to. I offered to repeat the Statement made by my right honourable friend in another place but, sadly, the House did not feel that necessary.

It is obviously a difficult situation, although I do not accept that we are looking at the demise of the nuclear industry—I think that it has a future. Being one of the world’s great optimists, the noble Lord should remember that some of the problems facing new developments in the nuclear industry—and we are still committed to seeing what we can do there—are possibly down to the success that we have seen in renewables, with the costs of offshore, onshore, wind and solar coming down. That makes the costs of nuclear, for example, much harder to deal with. We would like to bring those costs down but I do not think that they are likely to drop as much as has happened in the case of some renewables. Similarly, the costs of renewables include the cost of electricity storage, which, again, is coming down. Therefore, I suspect that the noble Lord, rather than being a Jeremiah, should always take a positive approach to changes and always look on the bright side of life, if that is possible.

I turn to the noble Lord, Lord Adonis. I am grateful that he referred to the debate in another place on 14 January, and I will certainly pass on to my honourable friend Richard Harrington the noble Lord’s welcome for his response to that debate, which I think dealt with most of the points that he raised. However, in my incompetence, I muddied the water and raised further points for the noble Lord. I hope that I will be able to deal with his concerns relating to additional qualifying material and the extra information required for the Secretary of State.

On additional qualifying material, all operators will provide accountancy and control plans to the ONR. That is a new requirement, which will come into effect in January 2021. The noble Lord also asked about the principal requirements of Regulation 45, which concerns the notification of receipt, production and transfer. That regulation requires an operator of a qualifying nuclear facility or other person to notify the Secretary of State of the receipt of a relevant item or qualifying nuclear material, the production, processing, derivation or fabrication of a relevant item from another relevant item or from obligated qualifying nuclear material, and the proposed transfer of a relevant item, together with details of the transferee and their location.

I turn to the process for NCAs and the questions raised by the noble Lord, Lord Grantchester, particularly in relation to Japan. I made it clear that we had concluded new agreements with Canada, the US and Australia. The situation is slightly different with Japan, in that, as I think I made clear in my opening remarks, a bilateral NCA is already in place. It will remain in place following the UK’s departure from the EU and therefore it is not necessary to conclude a new one. We have had detailed discussions on this and are in negotiations to ensure that we have appropriate arrangements in place with Japan to allow the agreement to remain operable after our exit from Euratom.

I note the remarks made by my noble friend Lady Altmann on the comments from whichever committee it was regarding these orders. I give an assurance that, with these orders, we are making sure that we have broad equivalence; we will have the same protection in place as existed before.

[Lord Grantchester]

It appears that there may be an issue with Japan. The Minister says that there is an agreement and we do not need to do anything but also that there are discussions about whether the agreement will remain operable. Could he clarify whether there are any issues at all with Japan?

[Lord Henley]

I am not aware of any issues. As I said, we have an NCA in place with Japan that goes back to 1998. That will remain in effect but, obviously, we want to continue discussions just in case. If I can help the noble Lord any further I will write to him, but that will probably not be necessary.

Motion agreed.