Clause 50
Energy Bill
5:00 pm
Steve Webb (Chair of the Election Manifesto Group, Cross-Portfolio and Non-Portfolio Responsibilities; Northavon, Liberal Democrat)
This is an important clause and raises a number of substantive issues. I hope that the Minister can paint a picture of the way that one of these funds will operate. I want to draw an analogy that he—as a former Pensions Minister—will appreciate, and it is between one of the funded decommissioning programmes and an occupational pension scheme. I hope that he will humour me with the analogy as it helps to illuminate my point. With an occupational pensions scheme, there is a set of long-lasting liabilities. The work force might be aged 21 now, but they may need pensions when they are 100. We are talking about similar time scales.
The second point is that the sums of money involved can be very substantial. When I originally heard about the funded decommissioning programmes, I thought that they would be nothing like occupational pension schemes and that we were talking about smaller amounts. However, this morning, the Minister said that the typical decommissioning cost would be £600 million and the typical disposal cost would be £300 million. Presumably, and I apologise if I have got the wrong end of the stick, one of those funds—for a single operator for a single, typical plant—might at some point need up to £900 million. If I understand correctly, an operator could also be running more than one plant, and therefore we could be talking about literally billions of pounds at peak. Clearly, there is an inflow and an outflow, which I will return to, but nevertheless we are talking about huge amounts of money.
There is a big issue about the adequacy of the funds—which we will come to in a couple of clauses—and about the control of inflow and outflow. We have been very focused on the inflow into the funds but, under clause 50, the regulations also talk about the circumstances under which a site operator can take money out of a fund. That is a critical point. Presumably, the money must be lumped in up front quite heavily, and I would like to probe the Minister further on the profile that he has in mind. I assume that a lot of money has to go in early and then, as the life of the plant progresses, the operator will start coming back to the trust fund. I want to stress that the nuclear White Paper published in January said:
“Independent funds, outside of the control of nuclear operators, should be created to accumulate and manage payments from the operator to meet the full costs”.
They are independent funds.
Let us suppose, however, that I were an operator who had been running for a while and who now had some nuclear waste that I wanted to get rid of. Would I go to the fund and say that although I had put £700 million in so far, I would now like to take something out to start meeting some of my liabilities? Is it the case that I could not take any money out until I had put in everything that I would ever want to put in? Is the process similar to a one-way valve? Is it the case that money keeps going in until it reaches an absolute maximum of all the money that will have to be spent and it can then be drawn upon? Will I not incur new liabilities, potentially increasing the amount that must go in at the same time as incurring costs that I must now spend to undertake some clean-up for the generation that I have already carried out?
As an operator, could I spend my own money—which has never gone through the trust—on clean-up and then tell the trust that it does not need to ask me to put in that gross amount as I have already spent some which I can offset against my liability? These are important questions. I cannot speak for other members of the Committee, but I do not get a sense of how the funds will work. Returning to the pension analogy, the occupational pension fund structure was supposed to do precisely that kind of thing—ring-fence money for long-term future liabilities. It failed catastrophically for 100,000 workers.