Nuclear Management Partners (Sellafield)

Tim Yeo Excerpts

Tuesday 13th January 2015 Commons Chamber

[Mr Davey]

The hon. Gentleman was doing quite well until his peroration. I will explain why it was a big political mistake for him to go down that route, but first I shall answer his specific questions, because they were important. He began by praising the staff, and I agree that they deserve huge praise because they are tackling one of the most difficult and dangerous jobs in Britain today. I can confirm that their terms and conditions are not affected by this at all. There will be full discussion with work force representatives. At this point, I should like to pay tribute to the hon. Member for Copeland (Mr Reed), who has worked assiduously on this issue.

The hon. Member for Rutherglen and Hamilton West asked why we allowed the contract continuation in 2013, given the findings in the National Audit Office’s report of weaknesses in it. The Nuclear Decommissioning Authority recommended that the contract be continued, and we had to endorse that recommendation. It was not a question of approving it; we endorsed it. At that time, when I looked at the structure that we had inherited from the last Government, I was concerned about the model. It was the model that I started asking questions about, and it is the model that has been reviewed. I have already explained a little about the review process; it is the model that we feel needs changing for the long term.

The hon. Gentleman asked why there was no alternative solution. The contract renewal process looked at the performance, which had not been good enough, but it is worth putting on record the fact that the performance of Nuclear Management Partners since the contract renewal has improved significantly, so this decision has not been taken on account of the performance of NMP. If we look at its performance over the past year, we can see that it has delivered on things that no one has delivered on for years. For example, the sludge-packing plant, which is needed to take out the toxic sludge from B30—a pond that has been there for decades—has now been commissioned and is ready for operation. That is a big achievement and I pay tribute to NMP for that. The decision has not been taken on account of performance; it has been taken because Ministers and the NDA questioned the model that we inherited from the last Government. We then put in place a proper review of that model.

The hon. Gentleman asked about the termination fees, and I can tell him that they are very low. The mechanisms under the current contract allow for termination and appropriate fee awards of less than 1% of the annual fee, and those mechanisms will be adhered to. Of course, during the transition, NMP will earn the fees that it would normally earn under the existing contract while it is still carrying out the work, but the termination fee is very small.

The hon. Gentleman also asked about the cost to the NDA of the KPMG report. I do not have that figure with me but I would be happy to write to him about that. He also mentioned the parent body organisation model that we are getting rid of at Sellafield, and asked whether we should get rid of it elsewhere. Our argument is that we should not. Let me explain why Sellafield is different.

At other nuclear power plants that are being decommissioned, such as Dounreay, the PBO model is working well. At Dounreay and other decommissioning sites, it is easy to specify the performance, the activities and the outcomes that are required. Those requirements are more certain and clear, and therefore easier to contract for. At Sellafield, because it is so complicated and because of the huge uncertainties about some of the materials that they are trying to clear up, it is very difficult to do that. Those huge uncertainties make the risks of contracting much more difficult, which is why the PBO structure needs to go there but not elsewhere.

The hon. Gentleman asked why the announcement was trailed in the press. I am afraid that it was not, and I am pleased that it was not, but there was some sort of leak. I do not know where that came from. He then suggested that this was a frantic U-turn, which is complete rubbish. We have been working on the issue carefully and diligently for some time. The NDA set up a review of the model, which I think was required. It made recommendations to officials who looked at them and made recommendations to Ministers and we have been looking at them for some time. Indeed, I asked questions when I got the initial recommendations to ensure that during the transition any risks were properly mitigated and I was not prepared to take the decision until I saw a proper risk mitigation plan for the transfer.

Ministers have been involved in the process, and given that the hon. Gentleman made a political point at the end of his peroration, let me make a political point back to him. These contracts and this model were drawn up under the previous Labour Government. The contract came into effect when the Leader of the Opposition was doing my job, so the hon. Gentleman should be addressing his questions about the model and the contract to the Leader of the Opposition, his own party leader. Once again, we have had to clear up the mess left by the Labour party.

[Mr Tim Yeo (South Suffolk) (Con)]

I welcome the Secretary of State’s emphasis on safety and value for money in making this decision and his clear explanation of the difference between Sellafield, with its difficult history and unique circumstances, and the other sites where this work takes place. In the light of what he has just said, is it his view that this model was never appropriate for Sellafield, given its unusual situation, whereas it might be working perfectly satisfactorily elsewhere?