Taxpayers' £20bn bill for nuclear clean-up

The bill for dealing with the legacy of Britain's civil nuclear programme had risen to £48bn and the final cost could be much higher still, the Government said yesterday.

Ministers also said that taxpayers would have to part with £20bn over the next fifteen years to fund the new body being created to take charge of the clean-up of nuclear power stations, research establishments and the Sellafield reprocessing site in Cumbria.

Critics of the nuclear industry said the figures were further evidence that the Government should veto the building of any new nuclear stations. However, a leaked Department of Trade and Industry report suggested that ministers were looking for ways to go ahead with up to eight new reactors by easing planning restrictions.

According to a White Paper published yesterday by the department, Managing the Nuclear Legacy, the new Liabilities Management Agency would need funding of at least £1.3bn a year between now and 2017.

This is £500m more than the Government has earmarked at present for dealing with "back end" costs of sites owned by British Nuclear Fuels and the UK Atomic Energy Authority.

Whitehall officials said that in the last year alone, BNFL's liabilities had risen from £35bn to £40.5bn while the UKAEA's liabilities now stood at £8.9bn.

But they also admitted that no-one really knew the true size of the final bill that will have to be borne by the taxpayer for a nuclear programme which dates back to the 1950s.

BNFL, for instance, has still not "bottomed out" the cost of decommissioning and cleaning up the original Windscale reactor which was damaged in 1957. "This is just one example," said a DTI official. "There are still some major uncertainties around what has to be dealt with and what the ultimate cost will be."

Friends of the Earth said the rising cost of Britain's nuclear clean-up demanded an investigation by the parliamentary spending watchdog the National Audit Office and the Commons Public Accounts Committee.

"Today's revelation of the staggering cost of cleaning up Britain's civil nuclear waste legacy highlights once again that nuclear power is completely uneconomic," said Roger Higman, FoE's nuclear campaigner. "The Government must address this issue seriously by ruling out the building of new nuclear power stations and concentrating on the development of renewable energy instead."

Two options are canvassed in the White Paper for funding the clean-up programme. The first is to set up a ring-fenced "segregated fund".

This would be like a pension fund and would be separate from other government finances. It would contain the £4bn already sitting in BNFL's nuclear liabilities investment portfolio and the annual payments to be made by government plus an cash surpluses from the operation of Sellafield and the Magnox reactors. The LMA would be free to invest the money to maximise returns.

The alternative proposal, and the one favoured by the Government, is to have a "statutory segregated account" which would contain the same pot of money but would be controlled by the DTI and the Treasury and would be pooled with general government finances. The White Paper says the segregated fund would offer few advantages over a segregated account and would be complex to operate.

Although the new agency will be responsible for managing and funding Britain's nuclear liabilities it will not be in charge of disposing of the waste. It is the job of Nirex, which was formed twenty years ago, to find deep sites capable of storing intermediate and low level nuclear waste.

Nirex, which is owned by BNFL, the UKAEA and British Energy, is pushing to be made independent but some say it ought to become part of the LMA. The White Paper is non-committal on this.

Once the new liabilities agency has been set up and BNFL is shorn of its £40bn in nuclear liabilities, the Government will be free to privatise the remaining commercial operations of BNFL. These consist of nuclear fuel manufacture and the clean-up of contaminated sites in other parts of the world.

The move could prove controversial because the taxpayer would be left to pick up the tab for BNFL's liabilities while shareholders enjoy the profits from its privatised commercial activities.

The part-privatisation of BNFL is still a long way off, however. Ministers had intended to go ahead with a partial sale of the company before the last election until the scandal over the falsification of safety records at Sellafield's Mixed Oxide Fuel plant.

The earliest that the Government intends to consider privatisation is 2004-05. Even that may prove optimistic because it is unlikely necessary legislation will be included in the next Queen's Speech.

Expensive waste

* Cleaning up the nuclear power industry will cost Britain £48bn

* The final clean-up bill will almost certainly rise but no one knows what it will be because there are "major uncertainties"

* For example, one of the big jobs still to be done is the decommissioning of the 1950s Windscale nuclear plant

* The Government wants to create a new Liabilities Management Agency to manage the clean-up nationally

* It would have a budget of at least £1.3bn a year for the next 15 years. That is £500m more than the current budget

* The agency's creation will pave the way for the part-privatisation of BNFL