Nuclear Safeguards Bill

Lord Hutton of Furness Excerpts

Report stage (Hansard): House of Lords
Tuesday 20th March 2018 Lords Chamber

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

My Lords, I shall speak also to Amendments 2 and 12.The amendments place the definition of “civil activities” in the Bill. The House will be aware that the term “civil activities” forms a key part of the main regulation-making power set out in new Section 76A(1)(a). Regulations can be made for the purpose of ensuring that qualifying nuclear materials, facilities or equipment are available only for use for civil activities, so the meaning of “civil activities” is one of the elements that determine the scope of the safeguards regime that can be made through those regulations.

I am grateful to the Delegated Powers and Regulatory Reform Committee for its recommendation on this matter: that a definition of “civil activities” should be, so far as is possible, placed in the Bill, supplemented by a power where necessary to develop its meaning in regulations. Having considered the committee’s recommendation on this matter, I am pleased to have been able to table this government amendment, which places the definition of “civil activities” in the Bill. This definition takes into account the continuing work on the draft regulations which will underpin the Bill, on which we are intending to consult by June.

It is important to emphasise again the fundamentals of what safeguards actually are and what we are hoping to achieve with our new domestic regime. Safeguards are nuclear non-proliferation reporting and verification processes by which states demonstrate to the international community that civil nuclear material is not diverted into military or weapons programmes. Nuclear safeguards measures include: reporting on civil nuclear material holdings and development plans; inspections of nuclear facilities by international inspectors; and monitoring, including by cameras in selected facilities.

As the House will now be well aware, nuclear safeguards are distinct from nuclear safety, which regards the prevention of nuclear accidents, and nuclear security, which is physical protection measures. Nuclear safety and nuclear security are the subject of separate regulatory regimes operated by the ONR.

The new domestic civil nuclear safeguards regime which we are developing is designed to ensure that we can robustly demonstrate to the international community that civil nuclear material is not being diverted into military or weapons programmes. I hope that the House will therefore agree that the proposed definition of “civil activities”, which has the concept of “peaceful purposes” at its core, suitably recognises this international commitment while including helpful detail on the types of activities covered by safeguards.

Although the committee accepted that it might still be necessary to supplement this definition with a power to embellish its meaning in regulations, I have not found that to be necessary. The amendment removes the existing power to specify in regulations activities that are or are not to be treated as “civil activities” and replaces it with a definition on the face of the Bill without creating another power. It therefore reduces the number of powers created by the Bill.

I hope that the House will agree that the amendments satisfactorily address the recommendations of the Delegated Powers and Regulatory Reform Committee. I commend them to the House and beg to move.

[Lord Hutton of Furness (Lab)]

My Lords, I welcome the tabling by the Minister of this amendment. It is always a good idea to see on the face of legislation the definition of terms used in it. It is helpful.

I quite understand why the Minister would want to confine the definition of “civil activities” to things carried on for peaceful purposes; for example, in relation to the production, processing and storage of nuclear material—it is within the safeguarding arrangements and makes sense; the same is true for the purposes of research and development. What I do not understand is why he has felt it necessary to use the words,

“carried on for peaceful purposes”,

in the context of generation of electricity, because I am not aware that the generation of electricity is ever for anything other than peaceful purposes.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I will enjoy the Minister’s response to my noble friend’s question. I welcome the amendments brought by the Minister; they follow our discussion in Committee and the recommendation of the Delegated Powers Committee. However, on his eloquent defence of our having this Bill before us, the Bill would be quite unnecessary if the Government were to reverse their decision to leave Euratom, which remains for many of us unfathomable and unjustified.

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[Lord Teverson (LD)]

My Lords, I am very happy to have added my name to this amendment. I am chair of the House’s EU Energy and Environment Sub-Committee, which looked at the subject of Brexit and energy security. Regretfully to some, we did not come out with any great headlines that said that the country was going to grind to a halt on the energy side, although we did say there was probably going to be an increase in prices because of increased electricity trading inefficiency. However, we made one exception, which we thought at that time was probably unlikely, but the evidence since might push this the other way. If the UK did not manage to replicate the agreements that Euratom has with the rest of the world and the IAEA, then there was a real risk of our current fleet of nuclear power stations coming to a halt, Hinkley C not being built and various other problems in terms of our deep work in nuclear research.

That is why this amendment absolutely puts its finger on the issue. It goes through the three things that have to be agreed for the United Kingdom to be able not just to fulfil its own obligations internationally but to be able to trade in nuclear material, people and spare parts even, post Brexit. What are they? We clearly need our own Office for Nuclear Regulation to be approved as a safeguarding authority by the IAEA, which is clearly essential; we need a voluntary offer agreement with the IAEA; and we need to replicate a number of our nuclear co-operation agreements with the rest of the world. I have certainly not heard, anywhere, even any attempt to try to give confidence that we will be able to roll over any of these NCAs following Brexit. But there are a large number of hurdles to achieving these aims, and this is going to take time.

In terms of the approval by the International Atomic Energy Agency of a safeguarding regime, they include recruitment, which the noble Lord, Lord Hunt, has talked about many times and was covered in the evidence that came to the House of Commons Select Committee. There is the training of those personnel. There is the retention of those personnel, which has been highlighted by the noble Lord, Lord Rooker, on previous occasions, as once they are qualified, there is a very strong international demand for them. There is also the issue, which I raised in Committee, of IT systems, and I thank the Minister the noble Lord, Lord Henley, for his reply to my Written Question, which very carefully went through the new systems that are required for us to be able to function as a safeguarding authority. Those systems are quite substantial, and we will come on to that—on my Amendment 9A—later today.

Of course, we also need to negotiate an agreement with the IAEA itself. When it comes to nuclear co-operation agreements, these are absolutely essential to us for our nuclear fissile material for power stations, for repairing, for spare parts and for nuclear intellectual property. It is very difficult to replicate those agreements so, as the noble Lord, Lord Warner, absolutely showed far better than I could, two of our key nuclear co-operation agreements—one with the United States, a legal requirement, and one with Australia, as the Minister highlighted in Committee—would expect us to be full members of the IAEA and to be able to have nuclear co-operation agreements in order to trade those materials. Even just in those two countries, we have major hurdles.

Turning to the voluntary offer agreements, these agreements are only necessary—or only made—by the five nuclear weapon states, or those that have declared as such; India, Pakistan and Israel have separate arrangements. I cannot imagine, however, that as a country that is one of the five permanent members of the United Nations Security Council and that stands for the upholding of international law and for the importance of the nuclear non-proliferation treaty, we would allow ourselves to go ahead without having concluded such an agreement with the IAEA.

That is why this amendment is so important. If we cannot fulfil these three criteria, then we should not go ahead: we should postpone leaving Euratom. Why is the date of 1 March 2019 there? Clearly, it is four weeks before we are set to leave the European Union. Like others, I have looked at the agreement that was made yesterday, and there is a separate article and chapter on Euratom. Paragraph 2 of Article 76 of that agreement—which is in green, meaning that it has been agreed by the European Union and ourselves in detail—says very starkly:

“The United Kingdom shall have sole responsibility for ensuring its compliance with international obligations arising as a consequence of its membership of the International Atomic Energy Agency and of the Treaty on the Non-Proliferation of Nuclear Weapons”.


When you look to the transition chapter, there is no mention of Euratom, or of paragraph 2 of Article 76 being postponed in any way. This ties up with the Government’s own view. We will be leaving Euratom on 29 March next year unless we make other arrangements, and the EU 27 and the UK are agreed on that position. That is why this is a matter not just of energy security but of national security.

[Lord Hutton of Furness]

I want to say a few words in support of the amendment of the noble Lord, Lord Broers. I draw the House’s attention to my interest in the register: I am currently the chair of the Nuclear Industry Association.

None of us in this House or outside who has been following this debate really has any doubt at all that the Government are seized of the significance of the challenge that we face. Having made the decision, which many of us regret, to leave the Euratom treaty, the Government have to do two things against a very tight deadline. The first is to replace the existing Euratom safeguarding regime, which, as other noble Lords have said, is a very important part—in fact, the central part—of one of our obligations as a nuclear weapons state: to ensure against the risk of nuclear proliferation. That is a big challenge. We have not exercised that function, which is currently done for us by Euratom, and building up the capability under the auspices of the ONR is a difficult challenge. The ONR itself has said, in evidence in another place, that it probably will not be ready to fully discharge those responsibilities by next March. So the Government—rightly, in my view—have come to the view that they need a little more time, once we have left the EU, to ensure that the ONR can step up and do that job, but it will be touch and go.

The other thing that the Government need to do, although, with respect to the Minister, they have come to this a little late, is to put in place all the machinery necessary for the continuance of the nuclear co-operation agreements that exist between ourselves and Japan, the US, Canada and Australia, our principal nuclear friends and allies, for the continuing exchange of information, goods and services in the nuclear sector. Of course, unless we are able to move seamlessly from the current NCAs to the new arrangements, the trade in goods and services will come to an end at the end of the implementation period at the end of 2020—assuming that the implementation period is agreed—unless in that period we have successfully put in place alternative nuclear co-operation agreements.

The fundamental reason why your Lordships’ House should pay close attention to the amendment is that it is good to have a default or a back-up. Suppose we do not get to the point at the end of the implementation period where these nuclear co-operation agreements have all been agreed, renegotiated and put into legal effect. The noble Lord, Lord Warner, drew our attention to some of the issues of complexity around renewing the NCAs. The process is not in our gift; we do not have control of the process whereby these replacement nuclear co-operation agreements will take legal effect, because in many of those countries they are international treaties—and will require the consent of, in the case of the US, the US Congress.

Any student of US politics knows one thing: that international treaties progress very slowly in Congress. Something that we have come to see in the US repeatedly, under both Democrat and Republican Presidents, is the extraordinary process that we in the UK do not understand at all where the US Government shut down because of, for example, a failure in Congress to agree budgets. We have no say in or control of that. Suppose there is a prolonged shutdown in the government machinery of the US at the very time when we want the US Congress to renew the nuclear co-operation agreement. What do we do then?

Fundamentally, the amendment poses that question: what do we do, all of us, if, with the very best of intentions and the absolute commitment of the Government, which I do not doubt, to renew these nuclear co-operation agreements, the implementation period comes to an end and we have not succeeded in putting into place the nuclear co-operation agreements? It seems pretty obvious that, despite all the difficulties of trying to construct a default or backstop, we have to give attention to the risk that we come to the end of that period and we have not renegotiated successfully—through no fault of our own but simply because we do not control all the processes that are involved in moving pieces of the jigsaw—and we do not find ourselves in the situation, where we all want to be, where these NCAs can be seamlessly renewed.

If we get to that point where the NCAs are not in place with our key nuclear trading allies, we have a major problem. In my view, it would become impossible for the vital exchange of goods and services in the nuclear sector to continue beyond that point legally and lawfully, and if it cannot be done legally and lawfully then it will not be done at all. The noble Lords, Lord Warner and Lord Teverson, have referred to the problem which that might create for the energy security of the UK. I am sure I cannot be the only person in this House to say, “I don’t think any of us should take a gamble or a risk with the energy security of our country”. Given the important role of the nuclear industry, that is precisely what we will be doing if we do not find the wherewithal in this Chamber today to find a way of constructing a backstop for the “What if?” moment if at the end of the day these nuclear co-operation agreements cannot be brought into effect at the time when we want them to be. That seems to be the issue that the amendment has raised, and it is not going to go away. We have to have an answer somehow to that fundamental question, and I look forward to what the Minister has to say.

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[Lord Henley]

My Lords, I hope that I can persuade the House that it could be irresponsible and would create confusion and doubt to support this amendment in a Division, as the noble Lord, Lord Grantchester, wishes to do.

The amendment seeks to require Ministers to request, as part of the negotiations with the EU, that the United Kingdom does not leave the Euratom treaty if it does not have certain agreements or arrangements in place by 1 March next year—that is, four weeks before exit day. Those agreements or arrangements are set out briefly in paragraphs (a), (b) and (c) of new subsection (3) proposed in the amendment, and I will deal with those in due course.

The noble Lord, Lord Grantchester, also made it clear that the amendment is not about stopping us leaving Euratom. He might give us that assurance but, listening to some of the other speeches, I am not sure that that is necessarily the wish of others, who have made it clear that they would like us to stay in Euratom—a point made in earlier interventions by the noble Lord, Lord Hutton, and others.

At this stage, it is important to remind the House that when my right honourable friend the Prime Minister gave notice last year of our intention to leave the European Union, she also commenced the process for leaving Euratom. The power to make that notification has already been debated at considerable length in both Houses of Parliament and authorised by the European Union (Notification of Withdrawal) Act 2017. That notification has been accepted by the European Union. The United Kingdom will therefore withdraw from Euratom at the same time as withdrawing from the European Union. That, as I put it to the noble Lord, Lord Hutton, earlier, is a done deal.

I commend all noble Lords’ commitment to ensuring that all the necessary measures are in place so that the United Kingdom can operate as an independent and responsible nuclear state upon withdrawal from Euratom. It is essential that the civil nuclear industry is not adversely affected by the UK’s withdrawal from either the EU or Euratom and that it can continue to operate with certainty. I underline the word “certainty”. That is our top priority and the reason for the Bill. It is why we are bringing forward all the regulations that sit beneath it—of which noble Lords will have seen draft versions—and the reason for the work the ONR is doing to put in place a regime, and that my department is doing to secure the agreements we need with the IAEA and key international partners. I will reiterate this point until the House understands the extent to which the UK stands ready to operate as an independent and responsible nuclear state from day one of exit.

The first quarterly update to Parliament, which will be available before the Easter break, will demonstrate our significant progress on this front, and I will share some of the details with the House shortly. Before I do so, however, I will address the crucial issue of the timing of our withdrawal from the Euratom treaty and the timings provided for in this amendment.

The amendment’s proposed suspension period for Euratom withdrawal is in conflict with the transition period already agreed by the UK and the European Union. This has been referred to by several noble Lords, including the noble Lord, Lord Teverson, and my noble friend Lord Trenchard. The agreement is for a transition period running from 30 March 2019 to 31 December 2020 and will include all of the Euratom acquis. To be clear, the agreement reached in Brussels on 19 March is that the transition period will include the continued delivery of the Euratom safeguards regime in the UK, and the UK will continue to be covered by Euratom-level agreements with third countries during that period. Clearly, this will take effect after the UK has left Euratom, whereas this amendment refers to a period prior to the implementation of Euratom withdrawal—one of the reasons why it is not satisfactory. The amendment is, therefore, at odds with national government policy and as such mandates a request that we know is futile.

In terms of the overall principle of the amendment, I must be clear that an attempt to mandate a particular stance in negotiations, in the way that this amendment seeks to do, does not belong in primary legislation. I cannot, therefore, accept this amendment but I understand that the House will want reassurances that we have in place the international agreements that we need on safeguards.

I turn to progress on securing those new bilateral safeguard agreements. We have made very good progress in negotiating these with the IAEA, which I will simply refer to as “the agency”—I have problems with the initials, as noble Lords may have noticed. Both the UK and the agency are clear that the new agreements should follow the same principles and scope as the current trilateral agreements.

The amendment also addresses relevant international agreements with other nations—the NCAs. To be clear, the United Kingdom is not a party to nuclear co-operation agreements concluded by Euratom with other nations. These are concluded by Euratom on behalf of the member states. I understand, however, that the intention of this amendment is to cover agreements Euratom currently has in place with third countries.

As the House will be aware, the Government have prioritised putting in place nuclear co-operation agreements with those nations which have a legal or policy requirement for them to be in place as a prerequisite for civil nuclear trade. We are on track to conclude, and to secure third-country and UK ratification of, all such agreements that are essential to ensure a smooth withdrawal from Euratom in advance of 2019, in particular those with the US, Canada, Australia and Japan. We have held positive and constructive discussions with each of these four countries and remain on track to ensure that these agreements will be in place in time.

[Lord Hutton of Furness]

Have Her Majesty’s Government received any assurance from the Government of the United States that this legislation will be in place, having passed through both Houses of Congress, in time to ensure that there is no break in trade? Has he received that assurance?

[Lord Henley]

My Lords, I am not aware of any such assurances. It is important that we get this legislation in place in good time. That is why I hope that we will complete Report today and Third Reading next week, and the Bill will receive Royal Assent some time after the Easter break. I do not know what is happening in the United States but I can assure the noble Lord that negotiations continue. We believe that we are on track to achieving the NCAs which are necessary. As I said, the important NCAs that we need are with the US, Canada, Australia and Japan. The amendment seeks relevant international agreements with those nations with which we have exercised rights within the last three years, which would include others that are not relevant. The important ones are those four—the ones that we trade with—and I give an assurance that we are on track. We have held positive and constructive discussions with each of these four countries and remain on track that those agreements will be in place in time.

All sides recognise the mutual interest in having these agreements in place to replace the Euratom agreements on which the UK currently relies. As I have said, discussions have been constructive; the substance of the new agreements is planned to follow very closely what is in the existing agreements. I am confident that sufficient progress is being made in this area, including on draft texts and ensuring that respective ratification processes and timetables have been taken into account in the planning.

Our substantial progress in international negotiations, coupled with our swift action to establish a legislative and regulatory framework for a domestic safeguards regime, not least via this Bill, means that we will be ready for exiting the Euratom treaty no matter the outcome of wider government negotiations on Brexit. The core aspects of this element of Amendment 3 will therefore already be met, and are therefore unnecessary.

Crucially, I must also bring the House’s attention to the fact that the effect of this amendment would extend to covering a number of additional agreements which, de facto, are not required to ensure a smooth withdrawal from Euratom. Introducing such requirements into the Bill will unnecessarily create huge risks and uncertainties to the UK’s ability to operate as an independent nuclear state from March 2019. I refer the noble Lord, Lord Hutton, particularly to proposed new subsection (3)(c) of the amendment, which could cover NCAs that Euratom has concluded with Uzbekistan, Kazakhstan, Argentina, and Ukraine. As I have previously set out, none of these countries has a legal or policy requirement for an NCA to be in place to facilitate nuclear trade. Requiring us to put agreements in place with each of these countries before we withdraw from Euratom would be a fruitless exercise which could jeopardise our work to establish a civil nuclear safeguards regime for the UK with all the essential agreements in place.

Further, proposed new subsection (3)(a) refers to an agreement between the UK and the agency to recognise the Office for Nuclear Regulation as the approved UK safeguards authority. I would like to make it clear that the agency’s focus in respect of the UK’s safeguards lies with the voluntary offer agreement and additional protocol, rather than the domestic legislation underpinning the domestic regime, or the UK’s arrangements for fulfilling its commitments. It is the Government—not the ONR—who enter into these agreements, and therefore the Government who must uphold these commitments, regardless of whether or not we choose to delegate obligations to an independent domestic regulator. The additional agreement referred to in Amendment 3 as distinct from the voluntary offer agreement is therefore unnecessary, impractical, and in no way required for a smooth withdrawal from Euratom.

As I and ministerial colleagues have emphasised throughout the passage of this Bill—this has been echoed by all those taking part in this and earlier debates—certainty for the industry is essential. Creating a situation where we are compelled to secure agreements—