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UK Tax-payers fleeced by the nuclear industry – Sellafield the perfect example

This is an extraordinary and detailed article. I regret that I have here just picked out significant parts and headings (in order to get across the main points) . This is a perfect example of how a government can be captured by vested corporate interests.  This process is certainly not new  – for Sellafield, for Britain, for the world. The author has carefully researched and detailed the way the government, Parliament, UK

fleecing-taxpayer-1“The use of cost reimbursement contracts for Sellafield Limited and its subcontractors means the financial risks are borne by the taxpayer.”

Sellafield – how the nuclear industry fleeced taxpayers, Ecologist, David
highly-recommendedLowry 19th January 2015  Last week the consortium holding a £22bn contract to clean up the Sellafield nuclear site was sacked, writes David Lowry.  But this is just the end of a long and scandalous tale of corporate
flag-UKprofit at taxpayers’ expense, and the active collusion of ministers and senior officials in fighting off Parliamentary scrutiny.

Last 4th November the managing director of Sellafield, the giant nuclear waste processing plant on the Cumbian coast in NW England, issued its report to the six-monthly meeting of the nuclear sites stakeholder group covering the Sellafield plant.

In bullish tone he opened his introduction,…………Everything in the Sellafield garden is rosy

Rising to his optimistic theme he went on to claim: “Twelve months on and I believe we are beginning to see the strategy deliver improvements in performance and this gives me increasing confidence that we can achieve what we promised to do, on time and to budget …

Two months later – sacked

Barely two months later, on 13 January, Energy Secretary Ed Davey announced in astatement to Parliament that he was sacking Nuclear Management Partners (NMP), the private consortium awarded the £22 billion top tier management contract for Britain’s biggest nuclear installation, in early October 2008……..

DECC’s nuclear quango the NDA, the owners of Sellafield on behalf of the taxpayer, produced an 8-page so-called Stakeholder Briefing to explain what was going on.

It states, inter alia, that: “This decision is the result of careful consideration and review of various commercial approaches in use where the public and private sector comes together to deliver complex programmes …

“The review is consistent with the undertaking that NDA gave at the 4 November 2013 and 4 December 2013 Public Accounts Committee Hearings, based on the NAO report ‘Assurance of reported savings at Sellafield’, HC778, 29 October 2013, that NDA would consider its options in regard to the way the Sellafield site was operated and in particular the use of the PBO (parent body organization) model.”

But it is as illuminating as much for what it omits as what it reveals.

A scandalous agreement to fleece the taxpayer

How could such a turn-around happen so quickly? As with everything in the nuclear industry, all is not what seems, and there is a complicated backstory to the Sellafield decision, which is startling.

I have worked on this issue with Labour MP Paul Flynn for seven years, and his attempts to make transparent the deal done to give NMP the contract have been met with obstruction – by Government and the nuclear industry at every turn.

In July 2008, Flynn got a sniff that some dodgy dealing was under way by the Department for Business, Enterprise and Regulatory Reform (BERR), then responsible for nuclear energy policy, to award a management contract for Sellafield to a new consortium.

At its crux was the stipulation that all the potentially vast liabilities would be covered by the taxpayer, while all the profits went to the consortium.

To probe this possibility, he asked the Labour minister responsible what recent communications or discussions had taken place with both the NDA and consortium applicants for the Sellafield decommissioning contract on the indemnification of the contract holder against claims arising.

The now late Malcolm Wicks responded: “The Department has been informed by the Nuclear Decommissioning Authority (NDA) that it expects to have to grant an indemnity against uninsurable claims arising from a nuclear incident that fall outside the protections offered by the Nuclear Installations Act and the Paris / Brussels Convention to whichever of the four bidders for the Sellafield contract is successful……..

“It would not be viable for any of the bidders to proceed without an indemnity because any fee earning benefits of the contract would be overwhelmed by the potential liabilities. The NDA has assessed that the benefits of engaging a new contractor far outweigh the remote risk that an indemnity might be called upon. The final form of the indemnity will reflect the specific terms proposed by the preferred bidder.” (Hansard, 14 July 2008 : Column 76W).

But were MPs bothered?

The cat was out of the Sellafield Boondoggle bag. ………..

there was a raft of other very worrying, unresolved concerns……..

Freedom of Information request spills the beans……… the extraordinary revelation that BERR, and the NDA, wanted to go ahead with awarding the deal to NMP, by avoiding Parliamentary scrutiny and circumventing democratic oversight, detailing how the deception of Parliament was to be effected. It was a clear scandal.

The collusion between Government and the NDA on behalf of the private consortium, and manifestly against the public interest of the taxpayer, was revealed on 4th January 2009 in The Independent on Sunday – with my detailed assistance – in an article by Geoffrey Lean, ‘Officials plotted Sellafield cover-up: MPs were denied the chance to challenge sweetener to private firm’s nuclear deal‘………

Any time at all for MPs’ scrutiny is too long………

Fast forward to the Coalition’s governance of Sellafield: Mr Flynn tabled another EDM, number 1048, two years ago, on 6 February 2013, which included the observation:

“DECC were questioned on the probity of such huge sums being awarded (to NMP) without Parliamentary scrutiny; recalls an earlier EDM 2321 on Parliamentary Oversight of Sellafield Indemnification tabled on 22 October 2008 observed accurately that the agreement would privatise the profits of the Sellafield management contract leaving the potentially multi-billion pound liabilities with taxpayers; acknowledges the subsequent release of internal memoranda and emails between DECC and NDA officials which expose the deliberate cover up from Parliament.”

A damning critique hidden from Parliament……

NMP: contrite all the way to the bank……  on 4 February 2014, the PAC published its devastating report ‘Managing risk at Sellafield, which inter alia concluded the NMP contract for Sellafield achieved “little improvement” commercially “for extra money spent”.

Another conclusion was that “The use of cost reimbursement contracts for Sellafield Limited and its subcontractors means the financial risks are borne by the taxpayer. This contracting approach may be the best option where costs are very uncertain………

An appalling waste of public money………. Margaret Hodge proclaimed the contract was an “appalling waste of public money … The cost of one project soared from £387 million to £729 million in 18 months; another rose from £341 million to £750 million, with completion delayed for six years, in much the same short period.”

The most damning conclusion read: “In 2011-12, the Authority paid out £54 million in fees, £17 million for ‘reachback’ staff and £11 million for executive staff seconded from Nuclear Management Partners. Sellafield Limited also awarded contracts to Nuclear Management Partners’ constituent companies worth some £54 million in 2011-12.

“That means, in effect, that those who let contracts awarded their own constituent companies contracts, which raises concerns about fair competition and value. ……..

NMP paid shareholders 145m in dividends

The Sunday Times Business section reported on 18 January that the failed NMP was paid its shareholders £145.1m in dividends during its tenure………

David Lowry is an environmental policy and research consultant who has been following the unfolding Sellafield imbroglio for over 10 years.

February 2, 2015 - Posted by | politics, Reference, UK

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