§ The Secretary of State for Trade and Industry (Ms Patricia Hewitt)In July this year, I announced that DTI and BNFL would conduct a joint review of the company's future strategy, and that recommendations would he made to the BNFL Board and Ministers in the Autumn.
It was decided that a review was necessary to evaluate alternative strategies, following on from the decision to rule out a flotation of the company after the Nuclear Decommissioning Authority had been formed in April 2005. The review has been conducted against the framework of the Government's policy objectives set out in the White Paper "Managing the Nuclear Legacy—a Strategy for Action" and in particular the need to develop a competitive market for nuclear site management. It has been driven by the Government's overriding priority to ensure safe, efficient and effective clean-up at Sellafield and other civil nuclear sites. One of the key objectives of the review was to focus BNFL's activities more closely on the priority of UK clean-up.
As announced in the White Paper, the NDA will take over strategic responsibility for the discharge of BNFL's UK nuclear liabilities from April 2005, subject to Parliamentary approval of the Energy Bill. A new parent company will be established at that point to hold those parts of BNFL that will not become the NDA's responsibility.
The Government does not intend that the new parent company and its holdings will be privatised as a whole by flotation. We have also agreed that the sale of the entire group as an integrated structure is not an objective. However, proposals for involving the private sector in individual businesses will be examined on their merits, consistent with the Government's overall objectives of focusing on a more competitive market in UK clean-up, maximising the value and limiting the risk 92WS of BNFL's businesses to taxpayers; while ensuring that safety, security and environmental standards are maintained.
Other key conclusions are:
The principal focus of the new parent company will be clean-up activities at UK sites.In the period up to the establishment of the NDA in April 2005, BNFL and its Board will continue to have responsibility for the safe and efficient running of its existing sites and for the financial performance of the company and its subsidiaries.
At the same time as a new parent company is established in April 2005, a new group of subsidiary companies will be established which will have initial responsibility for managing clean-up and operations at BNFL's UK sites under transitional arrangements to be agreed with the NDA. These companies will have the chance to bid to continue managing these sites when the NDA introduces competition.
Fuel manufacture will continue at the Springfields site, where clean-up activity is also underway. It will be established as a separate licensed entity, likely to be managed initially by Westinghouse, and with the NDA taking financial responsibility for the relevant decommissioning and clean-up liabilities.
The vast majority of the existing BNFL UK workforce will continue to be employed by companies that operate current BNFL sites. Initially, the two largest site licensee companies will be British Nuclear Fuels plc (which will continue to have the licence for the Sellafield site) and Magnox Electric plc. Other employees will transfer into companies within the clean-up group.
BNFL's existing Research and Technology facilities and a proportion of the personnel will remain with the site licensee companies. Other staff will transfer to a new Nuclear Science and Technology Service (NSTS) which will initially be a subsidiary of the new parent company and will deliver services on a commercial basis to the NDA, site licensee companies and third parties. These proposed arrangements for R & T are consistent with the Government's policy to keep the nuclear option open as set out in the White Paper "Our Energy Future—creating a low carbon economy".
The BNFL Board, and from April 2005, the Board of the new parent company will manage the other businesses to deliver value and in a way that limits and controls risk to the UK taxpayer.
In relation to the Westinghouse business, the Government has agreed with the BNFL Board that steps will be taken to enable the business to operate with greater financial independence from its parent, so that possibilities for private sector participation are opened up.
Future strategy for the investment in the Urenco fuel enrichment business will take full account of the strategic significance of this business and of the UK's nuclear non-proliferation obligations.
BNFL is seeking routes to reduce significantly its exposure to the US clean-up market.
These proposals are designed to help deliver the policy objectives set out in the 2002 White Paper "Managing the Nuclear Legacy" and are entirely 93WS consistent with our continuing commitment to keep the nuclear option open as set out in the 2003 Energy White Paper. They offer the best route towards both a more competitive market for UK clean-up, better value for taxpayers and a genuine opportunity for BNFL staff and management to continue to play a key role in meeting the challenge of nuclear clean-up.
We are also very conscious of the need to consider the impact of the NDA proposals and BNFL's future strategy on local communities. This is why the legislation to establish the NDA will facilitate its involvement in social and economic activities to support them.
We have sought to maximise the benefits from the establishment of the NDA to West Cumbria, for example:
The headquarters of the NDA will be in West Cumbria.We have established a key project on UK nuclear skills in West Cumbria with the North West Development AgencyMoreover, we are today setting out plans to establish a strategic taskforce for West Cumbria whose job it will be to plan and ensure the implementation of the social and economic regeneration of the area in light of decommissioning the Sellafield site.I am placing further details of the review outcome in the Library of the House.