Examination of Witnesses

Nuclear Safeguards Bill – in a Public Bill Committee at 9:30 am on 31st October 2017.

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Tom Greatrex, Jonathan Leech and Rupert Cowan gave evidence.

Photo of James Gray James Gray Conservative, North Wiltshire 9:54 am, 31st October 2017

I welcome the next panel to give evidence, and—without meaning any disrespect to the other two gentlemen—I particularly welcome back our former colleague, Tom Greatrex. Good to see you back here. You probably remember the tough time that you gave me at various times—you are going to get a tough time, too. Welcome to the other members of the panel, from Prospect Law. We have until 11.25 am, which is a reasonable time; but we will have to stop at 11.25 even if we are speaking, so I will try to wrap up a little bit before. First, I ask the three witnesses to introduce yourselves and, if you wish, to give a brief introduction to your thoughts on the Bill.

Rupert Cowan:

I am Rupert Cowan, with Prospect Law. My background is advising, as a lawyer, the nuclear industry, providers of services, operators and generators. I am a very worried lawyer at the moment, having seen the Second Reading debate, and I am concerned that, despite the obvious excellent progress that ONR is making towards introducing a safeguards regime, that regime on its own will not enable the industry to continue to operate without interruption.

Jonathan Leech:

I am also a lawyer specialising in nuclear law and regulation, working with industry. In terms of my initial views on the Bill, as far as it goes it is, of course, merely an enabling power. One thing I did want to lay out, though, is that it is emphatically not a contingency. Unless we have a radical change in direction of travel now, we will need it; it is not something that can be set aside. I am sure we will come back to discuss that in further detail. I also have some views on the scope of the powers that the Bill confers. But the real task will lie in the secondary legislation, how that is implemented, and how that relates to the nuclear co-operation agreements that we will need before any exit from Euratom, if we are not to disrupt the industry.

Tom Greatrex:

Tom Greatrex. I am not a lawyer; I am the chief executive of the Nuclear Industry Association, which is the trade body for the UK civil nuclear industry, representing 260-plus companies across the supply chain. The industry concern is very similar to that just expressed by my two colleagues—namely, that the Bill does one small part of a whole range of things that need to be done to ensure there is not disruption as a process of leaving Euratom. I am, similarly, intrigued by the ministerial comments in the Second Reading debate, particularly around this being a contingency, because that is something different from what we have been discussing to date. My overall concern is that we need to do a whole range of different things, not just what is in the Bill, to ensure that we have a position that avoids any disruption to activity in the civil nuclear industry.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Q I am very happy to ask this question of any of the witnesses, but it is particularly addressed to you, Tom. You have all made comments at different stages about, in effect, your own case, Tom—that you hope the decision to leave Euratom can be reversed. I am aware of the different points made; but may we for the moment leave aside these hypothetical points? I am not entering into their validity or otherwise for the purpose of this question. Do you believe it is necessary for Parliament to pass this Nuclear Safeguards Bill?

Tom Greatrex:

If we are to have a domestic safeguarding arrangement and system, we will need to have the power conveyed to the ONR to undertake that role. I have described the Bill before as being a necessary legislative step. It is; but obviously, a whole range of other steps need to come after that, which are contingent upon it. That is where the majority of the concern lies.

Rupert Cowan:

May I add to that? Emphatically yes, it is necessary to pass a Bill that puts in place a domestic safeguards regime. The Bill is a step towards achieving that. But what needs not to be lost is that the terms of that Bill, and the secondary legislation that it creates the opportunity to provide, must also be in terms that do not prevent those that we currently have nuclear co-operation agreements with courtesy of Euratom, continuing to co-operate with us. There is a very substantial concern among those that want to be our friends and continue to co-operate with us, and those that may not—who, for slightly more opaque reasons, do not want to make it easy to continue to co-operate with us—that the Bill, as it stands, will not allow a safeguards regime that is neutral in its application to the commercial parties that are participating in the industry. We have given you a note; if you read the end of it you will see that, although we are not entitled to, we are suggesting a possible amendment that you might consider to achieve that neutrality. It is in paragraph 4.

Photo of James Gray James Gray Conservative, North Wiltshire

Q Perhaps you could expand on what that proposal is.

Jonathan Leech:

Obviously, the Government’s stated intent appears to be to replicate, as far as possible, the current safeguarding regulatory regime that we have in place with Euratom. In a sense, all we should be looking for in the Bill, as a piece of enabling legislation, is to see wording that allows that to happen. Our concern around the way that power is expressed is that it appears currently to be written more from the perspective of the IAEA voluntary offer safeguarding agreement text than the Euratom treaty text. You might argue it is a fairly subtle distinction, but if we are seeking to replicate what we have, I would suggest that a good place to start is the high-level requirements of the treaty, which talk in terms of not diverting from declared use, and those at least should be considered as an additional scope that would be brought within the power, rather than purely focusing on material being diverted from civil activities. Hence the wording that we have proposed in the note is rooted in the treaty and would not take anything away from current scope, but would merely ensure that it is within the power to replicate.

Photo of Alex Norris Alex Norris Labour/Co-operative, Nottingham North

Q This is probably a question to Rupert or Jonathan. You said that you watched the Second Reading with interest. You will have heard in that session that if we leave the EU, which we will, we will by definition have to leave Euratom. If Parliament was your client, would that be the guidance you would give it—that one decision necessitates the other?

Jonathan Leech:

No.

Rupert Cowan:

Absolutely not.

Jonathan Leech:

There are obviously links between the two. There are statements in the treaty that article 50 does apply to the Euratom treaty, but there are sound legal arguments available that it is not an automatic consequence and in fact you have to follow a separate but similar process to exit Euratom. In a sense we have moved beyond that, to the extent that the withdrawal notice makes express reference to Euratom, so to the extent that there are two separate processes, we have already triggered both of them. That has maybe put us in a more difficult position in negotiating a potential extension period or remainder within Euratom, which would alleviate a lot of the concerns around the current two-year timetable, which creates some serious problems for the industry. The advice would be that you do not have to accept this and it may not be in your interests to do so.

Rupert Cowan:

I would add, the Minister has made statements—

Photo of James Gray James Gray Conservative, North Wiltshire

Briefly, as we are starting to get outside the scope of the Bill.

Rupert Cowan:

Fair enough.

Photo of James Gray James Gray Conservative, North Wiltshire

By all means comment briefly if you wish to—I would not want to be declared a tyrant—but I would stick to the terms of the Bill, which is nuclear safeguards, rather than the extempore bits.

Rupert Cowan:

Fine. The point that lies within the Bill and should be connected to the question is that the next step chronologically is to renegotiate the nuclear co-operation agreements. Unless the Bill provides a basis for safeguards, which gives reasons to those that do not wish to co-operate easily with us to co-operate, then you will find renegotiation very difficult.

Photo of James Gray James Gray Conservative, North Wiltshire

That will be a matter for another day. I tend to be quite strict with the Committee because it is a topic that can spread its wings in a whole variety of different areas. We are tasked by the House of Commons simply with discussing the terms and the wording of the Bill, rather than the wider consequences or circumstances.

Photo of Trudy Harrison Trudy Harrison Conservative, Copeland

Q With regard to the ownership of fissile material, I understand that Euratom actually owns the plutonium at Sellafield. Therefore is it not in the European Union’s interests to be co-operative, because would it really want that material sent back to it?

Rupert Cowan:

Not necessarily.

Jonathan Leech:

There is no question of that material being sent back.

Photo of Trudy Harrison Trudy Harrison Conservative, Copeland

Q Because it would be practically impossible to do so?

Jonathan Leech:

It is the UK’s responsibility.

Jonathan Leech:

Ownership will transfer to the UK on exit from Euratom.

Photo of Trudy Harrison Trudy Harrison Conservative, Copeland

Q But who currently owns the material?

Jonathan Leech:

I think technically that material belongs to Euratom at the moment.

Photo of Trudy Harrison Trudy Harrison Conservative, Copeland

Q That is certainly my understanding: that Euratom owns all of the fissile material in the UK in the civil nuclear industry.

Rupert Cowan:

That is the effect of the treaty.

Photo of Trudy Harrison Trudy Harrison Conservative, Copeland

Q Rupert, you mentioned interruptions to the industry. Could you be more specific? What interruptions? What needs to happen to avoid those interruptions? What are the consequences?

Rupert Cowan:

It is difficult to answer that question and remain entirely within the Bill, so I expect that James Gray will jump at me.

Photo of James Gray James Gray Conservative, North Wiltshire

You may digress very slightly, but don’t get too carried away.

Rupert Cowan:

Essentially, the safeguards regime is the first step. The second step is the replacement of the existing nuclear co-operation agreements with the jurisdictions that have them with us, notably the European Union, the United States, Korea and Japan. If Euratom is no longer included in our safeguards regime, each of those agreements must be renegotiated, and each of them will require a substantial resource to achieve that. For example, America requires a section 123 agreement under the US Atomic Energy Act. If there are any members that—for their own reasons—do not immediately wish to agree, they can rely on the fact that the safeguards are different from the Euratom safeguards, and say, “We are not able to agree a nuclear co-operation agreement with you yet,” or “in the future,” depending on what is driving them.

Photo of Trudy Harrison Trudy Harrison Conservative, Copeland

Q So I understand, but it is a first point of getting this Bill through.

Rupert Cowan:

Absolutely.

Photo of Trudy Harrison Trudy Harrison Conservative, Copeland

Q Which will then give us the opportunity to progress those bilateral agreements.

Rupert Cowan:

Correct, and nothing that we are saying suggests that this Bill should not go forward, save for the amendment we suggested, which would make those negotiations more straightforward.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy)

Q You mentioned that the Bill is first a contingency Bill and secondly an enabling Bill, and that the main work will be putting in place secondary legislation to get us to a basic safeguarding regime that by March 2019 will operate pretty much as Euratom does at the moment. How realistic do you think that process is, in respect not of the Bill but of what needs to be done to get to that position, on the basis of the Bill?

Jonathan Leech:

May I first go back to the point about the Bill being a contingency? It is very important that the Bill is no sense a contingency.

Photo of James Gray James Gray Conservative, North Wiltshire

Perhaps you could speak up a little. We are having slight difficulty hearing you.

Jonathan Leech:

The Bill is in no sense a contingency, unless we get into a position where we simply do not need our own domestic safeguards regime. Otherwise, it is necessary—it is essential. We have to have it, and we have to have it now. We need the secondary legislation on the table as soon as possible, if not now, and then we need the resource within ONR that we heard about earlier. Critically, it is not just that we need all that in place at the end of the two-year period; we also need to be able to demonstrate that to all those we seek to negotiate replacement nuclear co-operation agreements with, so that we can also have those agreements in place seamlessly at the end of the two-year period.

There is another point to clarify in relation to the role of the IAEA. We are not negotiating nuclear co-operation agreements with the IAEA; we have to negotiate with them on the voluntary offer agreement. Those negotiations are progressing, but I suspect that they are not negotiations that will be critical from a time perspective; it will be the negotiations of the nuclear co-operation agreements, and there we are at the mercy of political will in any number of counterpart states. That is where it becomes extremely uncertain as to whether it is even possible to have those things in place within that timescale. Certainly, to stand any chance of that, we should be in a position today to say, “These are our proposed regulations, this is our resource, this is where we are with IAEA. Can we start talking to you seriously about an NCA?” It is not enough to be able to say, “This is our enabling legislation.” We need to be a long way ahead of this if we are going to have any chance of meeting that two-year timescale.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy)

Q A first question on that statement: are there any individual bilateral agreements that one might think ought to be a priority for negotiation as opposed to others? Secondly, if one did engineer some kind of transitional arrangements with Euratom, would it be satisfactory for continued membership, effectively, of Euratom while those negotiations took place? Would that effective transitional membership of Euratom after March 2019 provide the sort of facilitation for those individual agreements to be satisfactorily concluded that would actually give comfort as far as the overall picture of those agreements was concerned?

Tom Greatrex:

It could do. You heard from the ONR earlier about the attractiveness of having a period of parallel working. That is in relation to the safeguarding activity and carrying out that function. It is a similar position with relation to co-operation agreements which currently exist under the Euratom umbrella. So the nuclear co-operation agreement we currently have with the US is as a member of Euratom. We will need to have a bilaterally negotiated nuclear co-operation agreement in the future, because it is a legislative requirement in the US and I am sure you will hear from others in evidence about why that is so critically important to particular power stations and projects. Enabling there to be a position where you are covered by the Euratom nuclear co-operation agreement while a bilateral nuclear co-operation agreement is finalised, agreed and put in place is exactly the kind of transitional arrangement or contingency or parallel working—whichever choice of words you want to use for broadly the same thing—is something that the industry has said is very desirable. You have also heard from the ONR that this will help them in the work they will be tasked to do as a result of the provisions of this Bill.

Jonathan Leech:

May I add a thought on the concept of associate membership and the extent to which we can rely on that? Of course, the nuclear co-operation agreements we are talking about are agreements with Euratom for the benefit of Euratom members, who are fully subscribed to all the obligations and commitments that entails, including acceptance of all Euratom regulation, including acceptance of European Court of Justice jurisdiction. When we come to look at the transitional phase, we should certainly not assume that all counterparts of those co-operation agreements with Euratom would accept that they should somehow continue to apply to the UK if the UK is something other than a fully subscribed Euratom member. So when we talk about associate membership or a third state of some sort and other examples around, that we can see where others have relationships with Euratom, that in itself would not solve the immediate need to ensure that we have the co-operation agreements in place that we need.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy)

Q Could you perhaps expand on that a little, because there are a number of potential lines that one can move down in this process? One, presumably, is to seek some kind of long-term associate membership of Euratom. We have two models in place for associate membership of Euratom at the moment, but I understand that they do not provide fully for the sort of arrangement that we might want to consider, which would cover all the issues of the transfer of responsibility to the UK jurisdiction.

Secondly, we might move down the line of a transitional arrangement, in order to get to the position—not at a more leisurely pace, but at a rather more possible pace —of possible complete rupture with Euratom, but in circumstances in which we might have got NCAs in place in a reasonably orderly way. What, in your view, are the realistic prospects of going down one or other of those routes in the sort of time that we have in front of us?

Photo of James Gray James Gray Conservative, North Wiltshire

Again, we need a brief answer, because we are drifting slightly wide of the terms of the Bill. We have plenty of time, but even so.

Rupert Cowan:

Let me bring it within the terms of the Bill, to make you feel happy, Mr Gray. Obviously the Bill enables those discussions, as has been described, but the chances of being able to follow either of those routes successfully before March 2018 are zero. The possibility of associate membership is not zero but that possibility, having been fulfilled if counterparties are willing to allow it, would not allow us either the opportunity or the time to negotiate the necessary co-operation agreements with the important counterparty jurisdictions that we need.

The second alternative that you suggest is of maintaining full membership for a period, so maybe it could be extended by two years with a sudden cut-off being agreed, and being able during that two-year extension to renegotiate NCAs. That is probably the most practical and preferable solution, but whether or not members of Euratom would be prepared to allow the UK to do that is a very different question.

Unfortunately, it is inevitable that we will be faced with discussions about renegotiating our NCAs with key counterparties who are neither motivated to agree quickly nor able to, because of their own international obligations of recognising the adequacy of our safeguarding arrangements, and there will be a point at which they cease to apply under Euratom, with consequences that remain to be seen.

I mean, I cannot imagine the United States immediately withdrawing its expertise from the various sites, but it may choose to. Similarly, Korea is a very important counterparty. Once the agreement comes to an end, the opportunity of persuading Korea to invest in Moorside goes away from us.

Photo of Mary Robinson Mary Robinson Conservative, Cheadle

Q This question is actually a continuation of that line of thought. How far does UK participation in Euratom enable access for nuclear research funding?

Rupert Cowan:

In terms of research, which is a separate issue, it is fundamental. All the joint research—the Joint European Torus and so forth—is predicated on membership of Euratom, and the funding arrangements are a subset of the arrangements of the Euratom members. At the moment, it will stop, and unless central Government funding is made available people will return home.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy)

Q I think this is a question about an issue that we were both concerned about. Mr Cowan, you mentioned the date of March 2018. That presumably is because you feel that that is the point at which—?

Rupert Cowan:

Well, it is the article 50 notice. [Interruption.] Did I say 2018? I meant 2019—apologies.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy)

Okay. Assuming we did mean 2019, if we are not in a position—even if we are reasonably close to a position—where we have done all the secondary legislation arrangements for nuclear safeguarding, but we have not made too much progress in a number of other areas relating to transposing Euratom responsibilities to the UK, and/or a number of those NCAs are in a difficult position as far as their conclusion is concerned, what would be the effect on the nuclear industry at that point?

Rupert Cowan:

It is very difficult to project, but it does mean that, unlike other industries, trade has to stop—trade in materials, in intellectual property and in people, as in intellectual property. For example, you can imagine that the French, if they were in a bad mood, might choose to drag their feet, because in consequence they would be able to take a monopoly of fuel retreatment from Japan, which currently sends some to the UK and some to France. Who is to know that that will not happen? The European Union will not see us as friends and will not seek to bend over backwards to find accommodation for a nuclear co-operation agreement. It is probably going to be a very slow and difficult arrangement.

One thing that needs to be in place to achieve any progress is a safeguards arrangement that is at least as good as Euratom’s. Currently, the Bill as drafted insinuates that there is a window for it to be less than Euratom, because it goes to IAEA rather than Euratom guidance. Hence the words that we are offering for someone to propose as an amendment, so that in those negotiations you can say, hand on heart, that there will be no dilution, and therefore no commercial advantage to the UK, as a result of our having a domestic safeguards arrangement rather than a Euratom safeguards arrangement.

Tom Greatrex:

Let me add that if, as has been stated, the Government’s intention is to replicate the Euratom standards and arrangements, you will have heard from the ONR earlier that it will not be possible to implement that at the end of March 2019. That is the crux of the industry’s concern about there being sufficient time to enable the new UK regime to be in place. The Bill does just the very first part of enabling that to start to happen. It does not solve the issue; there are a whole range of things that have to happen as a consequence of the Bill and other remits that need to be struck, which is why people are concerned about a very real-time pressure.

Jonathan Leech:

The very first step would be to make absolutely certain that the Bill gives the power to create the regulatory regime that is equivalent to Euratom. The second step, which needs to follow that very closely, is to ensure, by whatever means necessary, that ONR is given the resource to do what needs to be done, so that we do not face any hiatus, if indeed that is possible.

Rupert Cowan:

In the safeguards regime.

Jonathan Leech:

Yes, in the safeguards regime.

Rupert Cowan:

Which then allows the discussions to go forward from a position of fairness and honesty; that we are not trying to dilute or change the obligations we have under Euratom, which is what others might suspect.

Jonathan Leech:

When you have both of those things, you can go and speak to counterparties to the co-operation agreements you need and say, “This is what we are doing. We can lay it out on the table for you. This is the investment we are making and these are the regulations we will have in place.” If we cannot do that, they simply will not take us seriously.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy)

Q The Bill, as we have heard and as you have set out this morning, is very much an enabling Bill. As the Bill stands, the process of getting us to where we need to be by March 2019 is entirely in the hands of secondary legislation, which does what secondary legislation does and is accountable in the way that secondary legislation is. One of my concerns is the extent to which the Bill therefore places in the hands of somebody—obviously, present company are entirely absolved from this criticism—the ability to do the various things to get us to that position by March 2019 but without further reference to Parliament. Do you have any views on the legal position relating to that, and on whether Parliament ought to have some kind of scrutiny role to ensure that we do get to that position by March 2019, bearing in mind that the current arrangements in the Bill appear not to allow that to happen?

Jonathan Leech:

As a matter of general political process, yes, there needs to be scrutiny so that these regulations are developed now—not over the next two years, but over the next month—so that we are then in a position to take the steps that follow. In terms of the broader position, if what we are seeking to do is to replicate and preserve what is, at the moment, effectively EU regulation, then that is but one of many areas where a similar approach may be taken. It is a little more complex here because you have to untangle it from the resource of Euratom and the enforcement processes and the ECJ jurisdiction. Nevertheless, if the statement is that it is to replicate, then the objective should be just that.

In terms of the fine detail of the regulation, it is an intensely technical thing, and some sort of secondary legislation is probably the right place for it. My biggest concern would be around scrutiny of the timetable to ensure that it is not delayed in any way that will jeopardise our position at the end of the two-year process.

Tom Greatrex:

I would have thought that, as Members of Parliament, you would want to be satisfied and confident that everything is in place in the timeframe in which it needs to be in place. It is obviously open to you to seek to amend the Bill in order to put that to the test.

A subsequent related point is that the industry also thinks that it is important that the Bill could be amended to ensure that the nuclear sector is consulted on the detail of that new regulation. You have to bear in mind that there will be people who will need to make sure that they can comply with that regulation, so understanding its content is vital. Getting that right—given the timeframe and the time pressures we face—is going to be critical. So there is another route to pursue to ensure not only that Parliament is satisfied, but that the industry has an opportunity to be consulted on the detail of that new regulation so that it is right first time.

Jonathan Leech:

In a sense what is needed is the highest degree of openness and the widest consultation possible in the development of that regulation.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy)

Q On a scale of one to 10, how much of a scare story position is there on what would happen to the nuclear industry if we do not have those arrangements in place by March 2019, or if we do not have a transition period in which we could get those arrangements in place on a more leisurely basis? Some stories have been circulating that the nuclear industry will essentially cease to function, when it comes to the transfer of fissile material, supply chains and so on. Do you take that completely seriously or partly seriously, or are you not worried about it at all?

Rupert Cowan:

Completely seriously. The reason for that is that each of the counterparties with whom we trade in fissile material, components, or anything else listed as sensitive and nuclear, have their own international treaty obligations. One of those obligations is that they should not trade with people who do not have safeguard arrangements in place that are at least equal to the IAEA safeguards. Unless that is complete and in place, we will not trade, and so they will not be able to continue business with us—full stop. If any members will be participating tomorrow in the Business, Energy and Industrial Strategy Committee on the economic implications for the industry, that is what will be said to you.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Q Thank you, Mr Cowan, Mr Leech and Tom, for your support for the Bill. Everything you have said is the reason why we are introducing the Bill, and I thank you very much for your support for it. I have read your opinions and amendments and have taken them into consideration. Thank you very much for the work that you have done. Please do not think that the evidence that you have given is taken lightly, but I must underpin that by confirming your answer to a previous question, which was that you do support the Bill. I accept fully the reasons why you do.

Rupert Cowan:

We support the Bill completely. We suggest the amendments for the reasons described.

Photo of Paul Blomfield Paul Blomfield Shadow Minister (Exiting the European Union)

Q I want to explore the concerns about the gap between the existing safeguarding regime and that envisaged by the Bill. Dr Golshan said that the new regime that she was seeking to establish would not replicate the functions undertaken by Euratom in relation to safeguarding. I am also conscious that the NIA’s evidence talked about the importance of leaving without any gap, but that you were worried about the gaps provided. I wonder whether you could elaborate on that a little more, Tom.

Tom Greatrex:

As the ONR said earlier this morning, it will not be possible to replicate the safeguarding regime on day one. If the Government have said that they intend to replicate the standards that we currently have as a member of Euratom, there is obviously a concern that we will not be in the position where we will be meeting the same standards at the point at which we leave Euratom. That is the crucial point about the need for a transitional arrangement or parallel working—there are different ways of describing what is broadly the same thing—which is to avoid that gap.

If you do not have the correct arrangements in place, as you have heard from others on the panel, the series of other arrangements that are effectively contingent on the safeguarding regime will not be able to be in place. That is why it affects absolutely everything to do with the functioning of the industry as it currently functions and has functioned for the past 40 years or more.

We can take a practical example. Because of the international nature of the nuclear industry, the Sizewell reactor currently generating power in Suffolk is based on Westinghouse technology. That technology is therefore US technology. Because of the legal requirement to have a nuclear co-operation agreement in place, there are very real—these are not scare stories—and legitimate concerns that even the ability to exchange information between the operators of the site, EDF and where the technology originates from will potentially be illegal at the point when we come out of Euratom, if we do not have successor arrangements in place or a period of time to enable the transition to be finalised and for the new regime to be put in the place.

It is not about being against the Bill. The Bill does the first step, but there are many more subsequent steps that have to be taken. The ability to do that in a very limited timeframe is the cause of the majority of the concern.

Photo of James Gray James Gray Conservative, North Wiltshire

We will discuss that in this room when we are considering subsequent Bills, no doubt.

Photo of Trudy Harrison Trudy Harrison Conservative, Copeland

Q I am hearing that the legislation should be descriptive of Euratom—almost a cut-and-paste job. That differs from the way that ONR currently deals with safety and security, which is outcome-based. While ONR has responsibility for safety and regulates for security, do you see benefits in ONR also having responsibility for safeguarding? Could there be cost or knowledge and skills benefits in ONR having all three strands of the nuclear industry in one building and within one organisation?

Tom Greatrex:

The question is probably better addressed to the ONR, but I think the skillsets that would give the ability to move between those different things may be limited to some extent. However, as you heard earlier, it is not unusual for domestic regulators to have responsibilities for safeguarding inspection. That happens in a number of different countries already, but Euratom effectively does that on our behalf. I do not think that in itself is particularly an issue. It is about the process of being able to move from the current situation to the new one.

In the fullness of time, if we get all these arrangements in place and there is not an interruption, and all those concerns are addressed, I do not think there is anything to suggest that the ONR would not be fully capable of doing this alongside the other things it is currently required to do. I am not sure to what extent there would be the economies of scale benefits that you suggest, because the skills involved in safeguarding inspections are quite different from assessing new reactor designs or the routine safety inspections that happen at sites around the country, such as Sellafield and others.

Photo of Trudy Harrison Trudy Harrison Conservative, Copeland

Q I am going to come back to the waste issue. I understand that we have waste from the United States and also, I think, from Tokaimura in Japan at Sellafield. What would happen to that waste—waste owned by either other countries or Euratom—if we do not get this in place?

Rupert Cowan:

They rub their hands with glee and say, “You keep it; your problem.”

Photo of Trudy Harrison Trudy Harrison Conservative, Copeland

But it already is our problem.

Rupert Cowan:

No, because it goes back to Japan when it has been re-cleaned. They will just say it is our problem, and that they cannot take it because they are not allowed to. You should not get the impression from what we are saying that we are in any way opposed to the Bill. It is probably correct that, ultimately, ONR being responsible for safeguarding is a positive outcome. It is the disruption that frightens us. That disruption is not a scare story, it is a very real possibility in terms of electricity generation and the ownership, safeguarding and storage of spent fuels, which would be going back to their home base—or not, depending on the particular arrangement; it is all going to stop if we do not get this organised. That is the danger.

I am not saying that we will not have resolved it in 10 years’ time, but the next two or three years look pretty bleak. That is the worry.

Jonathan Leech:

We have to keep in mind that international nuclear trade depends upon international acceptability; it is very much a compliance-driven culture. It is not the case that there is a fall-back that might involve a higher tariff or whatever; it would simply be unlawful, so it would simply stop until such time as we have resolved the impasse.

Photo of James Gray James Gray Conservative, North Wiltshire

We are testing the edges of the Bill. Maybe because I want to say “sir”, I call Sir Robert Syms.

Photo of Robert Syms Robert Syms Conservative, Poole

Q May I ask you this, Mr Leech? You are saying that this is a good first start, but the key thing is the regulations. From your point of view, would you like to see as many of the regulations published as early as possible, so that you can see the overarching regulatory regime, which would build confidence for the industry?

Jonathan Leech:

Correct. We should see those published as soon as possible and consulted on as widely and as soon as possible. That should happen alongside the development of the resource to deliver them.

Photo of James Gray James Gray Conservative, North Wiltshire

I am being fairly relaxed, but I want to bring it back to what is in the Bill, rather than what is not. With that in mind, I call Dr Whitehead.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy)

Q What is in the Bill is, among other things in the schedule, some possible route by which nuclear inspection might be made compatible with what the process of safeguarding inspection consists of, so far as what those Euratom inspectors who undertake it in this country on behalf of Euratom do. In the Energy Act 2013, there is a substantial appendix that sets out in detail the responsibilities, powers and intervention arrangements of nuclear inspectors for the whole nuclear industry, except for safeguarding, which is specifically removed from inspectors’ responsibilities by that piece of legislation. What would be necessary to make sure that those powers in the 2013 Act for nuclear inspectors are mirrored exactly, to integrate what the Euratom inspectors did and what UK inspectors would be required to do in the future?

Jonathan Leech:

You are right into the detail of the technical regulation there. The first thing is that you need to expand the scope of those powers within the legislation, and the Bill seeks to do that. Then you need the regulation to set out exactly what is to be done, how and where, and take into account the point, which we have not really gone into, about the outcomes-based approach that the rest of our domestic nuclear regulation is based on. That will present a challenge in transcribing the regulations for use in UK law. We are probably straying from the Bill there. However, provided that we set out in the Bill an expansion of those enforcement powers, which will be an essential component of the expansion of ONR’s role, we are starting to put in place what we need to have. We need the regulation to go with it.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy)

Q Would it be necessary, for example, to bring into the Bill the entire range of powers and intervention possibilities that inspectors have, to ensure that they are identical to those that would have been undertaken by Euratom inspectors? Or would it be necessary perhaps just to switch off those bits of the 2013 Act that meant that inspectors could not inspect and issue prohibition notices and other things relating to nuclear safeguarding, whereas they could do everything else? Is it not the case that, in the 2013 Act, there are sufficient powers for those inspectors to enable them to do what they need to do as far as a successor regime to Euratom is concerned simply by turning off what they are not able to do?

Jonathan Leech:

In terms of how it is presented, I suggest that it is preferable to have our law on this matter collected together in one place and so to proceed by amendment, rather than by replication. If we create a whole new regime in the Bill, then we introduce the possibility of discrepancies between two similar but possibly slightly different regimes, that is generally unhelpful. To proceed by amendment to and expansion of the Energy Act 2013 is probably the right way to go.

Rupert Cowan:

I see the people who are negotiating the nuclear co-operation agreements. They want to be able to refer to a clear set of guidelines, which is clearly at least as effective in safeguarding, and therefore allowing the counterparty to fulfil its international obligation, as the existing Euratom system. It needs to be easily referable to, so that you can sell it and get your deal as quickly as possible, without them taking points about the way your safeguards are drafted or presented. That should be very much in the minds of the draftsmen—that there is a commercial and pressing need to get this agreed with seven or eight foreign jurisdictions as quickly as possible, some of whom will be willing, and some of whom will be less willing, to agree your safeguards regime as adequate to fulfil their obligations. It needs to be clear, clean and saleable. That is the secondary legislation that follows from the Bill, which is why we have suggested only one amendment. The objective of the amendment is to do that, so you can go and talk to somebody in Korea or the United States and say, “This works,” and they cannot see a reason quickly why it should not. You are resourced, the regulations are clear, they apply and you can have your discussion over in months, rather than years.

Photo of James Gray James Gray Conservative, North Wiltshire

My instinct is that the Committee has found your evidence extremely useful. Unless there are any further questions, I thank you all for your extremely helpful, useful, well-informed and wide-ranging evidence. We are most grateful to you.

Ordered, That further consideration be now adjourned. —(Rebecca Harris.)

Adjourned till this day at Two o’clock.