Sellafield clean-up costs out of control

London – The cost of cleaning up the Sellafield nuclear site is now approaching the £70-billion mark, and could be rising out of control, according to a report by the Government Committee of Public Accounts. It estimates that around £1.6 billion of public money is being spent at Sellafield each year. 

A huge legacy of nuclear waste has been allowed to build up on the Sellafield site, warned Margaret Hodge MP, Chair of the Committee – a body appointed by the House of Commons to examine value-for-money aspects of government spending.

“Successive governments have failed to get to grips with this critical problem, to the point where the total lifetime cost of decommissioning the site has now reached £67.5 billion, and there’s no indication of when that cost will stop rising,” said Hodge.

Uncertainties remain around the Nuclear Decommissioning Authority’s decommissioning plan, not least in terms of what precisely is in the waste that lies in the legacy ponds and silos – Committee MPs noted. It is unclear, they added, how long it will take to deal with hazardous radioactive waste at Sellafield or how much it will cost the taxpayer.

Of the 14 current major projects, 12 were behind schedule in the last year and five of those were over budget. Furthermore, now that Cumbria County Council has ruled out West Cumbria as the site of the proposed geological disposal facility, a solution to the problem of long-term storage of the waste is as far away as ever.

Private contractors who gain contracts take no risk because of the uncertainties that persist, continued the report. The Authority, it said, needs to determine when it will have enough certainty over costs to transfer risk to the private sector.

In November 2008, the Authority contracted with an international consortium—Nuclear Management Partners Ltd—to improve Sellafield Limited’s management of the site, including the development of an improved lifetime plan.

The report concluded that taxpayers were not getting a good deal from the Authority’s arrangement with Nuclear Management Partners. Last year the consortium was rewarded with £54 million in fees, despite only two out of 14 major projects being on track.

“Public money to the tune of £1.6 billion is being spent at Sellafield each year. This is an area of considerable deprivation with high unemployment. We are looking for there to be clearer ambition that spending on this huge scale contributes to creating jobs and supports sustainable growth in the region and the UK,” commented Hodge.

Under the Authority’s plan for decommissioning, Sellafield Ltd is to start retrieving hazardous waste currently held in legacy facilities in 2015.

“However, given the track record on the site and given that only two of the 14 major projects were being delivered on or ahead of schedule in 2011-12, we are not yet convinced that this date will be met or that sufficient progress is being made,” said the report.

“Basic project management failings continue to cause delays and increase costs, while doubts remain over the robustness of the plan, in particular whether the Authority is progressing the development of the geological disposal facility as quickly as possible.

The Authority has a cost reimbursement contract with Sellafield Limited and all bar one of the major projects at the site involve a cost reimbursement contract between Sellafield Limited and its subcontractors. This means that taxpayers —rather than Sellafield Limited or its subcontractors—bear  the financial risks of delays and cost increases.

The Committee MPs concluded: “This contracting approach may be the best option while the plan and individual projects contain significant uncertainties, but the Authority has yet to work out how and when it will start to transfer more risk to the private sector.

“All payments to Nuclear Management Partners and, indeed to their constituent companies, need to be strictly controlled and determined by robust, verified assessments of the value gained, so that payments are not made which would seem to constitute a reward for failure.

“Furthermore, the costs of seconding staff from Nuclear Management Partners’ parent companies appear excessively high, especially given the wage rates in the local economy.”