It's shocking but true: we are not, as I had always understood, investing in a fund to manage our current nuclear waste in the future.

We are paying lip service to it and dodging the question at the expense of future taxpayers.

Moreover, there is total confusion about what provisions are being put in place to manage any future waste from any new nuclear power stations.

Will the real DECC budget please stand up?

Last week, the Guardian published on its website figures which appeared to show that spending by the Department of Energy and Climate Change on nuclear waste management has risen by an astonishing 81%, as part of an overall budget increase from last year of over 146%.

In trying to find out whether this is true I have found out a truth worse than this, as well as an admission that any new nuclear operators are allegedly being asked to contribute to a fund not only to pay for management and disposal of the new nuclear waste which their plants will create, but also for that of existing nuclear waste!

According to the Guardian, in 2009/10 DECC's entire spend totaled £3.18bn, but in 2010/11 it is spending £8.06bn, an increase of 146.02% that is largely due to nuclear liabilities.

This spending, according to the Guardian, breaks down as follows:

DECC spending: £ per topic and change from last year
 

Topic

Amount

% increase or decrease

Nuclear Decommissioning Authority

£6.9bn

+81.12%

Committee for Climate Change

£4.4m

+12.12%

Low carbon UK

£622.7m

-29.8%

International agreement on climate change

£5.4m

+22.42%

Promoting low carbon technologies
in developing countries

£278.6m

+159.52%

Coal Authority

£0.7m

+87.02%

Professional support and infrastructure

£117.7m

-7.62%

Energy

£87.2m

+3.33%

Historic energy liabilities

£104.5m

-106.8%

 

We already knew that DECC is unique among government departments because it has to spend almost half of its budget on dealing with existing nuclear waste.

But to see that this has risen to almost almost 86% of overall DECC spending seemed incredible.

Trying to check this figure led me on a very confusing path.

My first port of call was the Guardian itself, where its reporter Simon Rogers said that DECC's press office had told him that the increase in spending was due to increased cost of high level waste management at Sellafield.

I then had several lengthy phone conversations and email exchanges with DECC's press officers, to see whether this was true.

They themselves were clearly struggling to understand what their own departmental figures meant and had to seek clarification more than once.

Now that they have explained them, I am even more concerned that the UK's nuclear liabilities are being left for future taxpayers to pay for.

The increase in the amount allocated to the NDA in DECC's budget is in fact only a paper increase. It is not real.

Peter Wilson at DECC said that the cash that actually went ‘out of the door’ to the NDA for its decommissioning work was £1.7bn.

This is in line with the NDA's business plan, which says that government funding in 2010/11 is £1.69bn, rising to £2.022bn in the following financial year and £2.249bn in 2012/13.

But the government reviews every three or five years the cost of nuclear waste management over the next 100 years. Peter says "obviously that figure goes down as we spend money each year".

Personally, I have never known it to go down.

In fact, as he says, "... it can also go up. That is what has just happened".

Yes, this is what we expect.

He says the estimate "has increased by £5bn [to £55bn], and government budgeting rules mean that our expenditure tables also need to reflect that".

The real cost of dealing with existing waste

This £55bn figure is a mystery. I can't find a source for it anywhere.

I can find that the NDA's Nuclear Provision for 2010/2011 alone was just over £49bn, and that The National Audit Office put the cost of dealing with the waste and decommissioning of the UK's 19 reactors at £73bn in 2008.... a much higher figure.

What will be the real cost of dealing with existing waste? In truth, nobody really knows.

But assuming that £55bn is the figure DECC is using, the £5bn increase is just a 10% increase on the one it was using before.

Yet the Guardian says the spending has gone up 81%. What, I wanted to know, accounts for the other 71%?

Is it because the NDA has to build a new pond store at Sellafield (see last month's report by Dr. Mike Weightman, the chief nuclear inspector at the Office for Nuclear Regulation?

No.

Is it because of the inspection of our military nuclear waste which has just taken place?

No. Both of these are covered by the NDA's regular spending.

Creative accountancy

It is actually an accounting trick.

There is no money.

It is a note attached to the budget which means "we hereby observe that will have to pay out £xxx billion of cash at some point in the future".

This sounds like the kind of creative accountancy that has gotten public finances into the mess they are in right now.

To help us understand it, let's try to analogise the situation to household spending.

If I know I have to spend £100,000 to maintain my house over the next 100 years, I might choose to pay £1,000 a year into an interest-bearing account to accrue as future source of funding.

Is the nuclear liability money being spent this way, I asked DECC?

No.

Peter Wilson was very clear about this. He wrote: "You might then ask, is this extra £5bn we’ve noted money that is set aside and kept in a separate pot somewhere, (like a pension)?

"No," he answered himself. "Think of the reference to it in the accounts as a formal record of the fact that we’ve changed our estimate of the grand total of what we think will need to spent in future."

In fact the pension plan is a great analogy. If you or I don't put a regular amount in to our pension plan then we know there will be nothing there in the future when we need it.

But DECC is not actually putting money into a fund to manage our nuclear liability, it is just stating that the money needs to be there in the future.

Where will it come from?

Who knows?

Remember, this is a taxpayers' liability.

But I have discovered even more than this.

Who will pay for new nuclear waste?

In a phone conversation with another press officer, who I believe to be named Jonathan Farr, he admitted that new nuclear operators like Horizon and EDF are being asked to contribute to a fund not only to pay for management and disposal of the new nuclear waste which their plants will create, but also for that of existing nuclear waste.

I double checked that this was what he meant.

I said, "Are you seriously saying that the government is not putting aside cash to deal with our nuclear legacy but is asking nuclear operators to do so? What do they think of that?"

If I were a nuclear operator I would be outraged.

But the question was dodged. He was having a hard time explaining it in the first place, and merely reiterated the line that the government is taking a responsible position.

DECC's line on new nuclear waste is: "New nuclear operators will be required by law to put money aside from day one to pay for the eventual decommissioning costs and their full share of waste disposal."

The law is the Energy Act 2011, under provision for the nuclear operator’s Funded Decommissioning Programme (FDP).

The value of the FDP is calculated using a “Waste Transfer Price” of, currently, £1bn per reactor, although this is being debated by the Nuclear Liabilities Financing Board.

But Greenpeace's economist Ian Jackson has calculated that due to the extra work needed to comply with post-Fukushima safety requirements, the estimate is out by £445 million.

If there are 10 reactors built, taxpayers will end up forking out £4.45bn to make up the shortfall.

Furthermore, the maximum price cap on all other costs has also been underestimated, he says, and should be £11.2bn higher.

The Nuclear Liabilities Financing Board is the quango looking at the FDP issue, setting this cap.

But who exactly is doing its work?

According to the minutes of the Board's meetings, which are held every two or three months, representatives of the consortia hoping to build new nuclear power stations, Horizon, and NNB Genco (the consortium of EDF Energy and Centrica), have regularly attended its meetings.

Not only that, they seem to be setting the agenda and terms.

The minutes for December 2010, January and April 2011 illustrate how the Board and the office for Nuclear Development are letting NNB Genco design and explain the Fund, its structure and its role.

Isn't this a case of the tail wagging the dog?

Why are the private companies which stand to benefit from obtaining the lowest cost imposition able not only to attend the meetings of those who are setting the terms for private sector liability, but actually design these terms?

Moreover, there is no mention in any of the minutes of any real detail, for the sake of transparency.

Crucially, there is also no mention of whether the operators are supposed to be liable for any decommissioning costs of existing waste, as the DECC press officer said.

The whole business is, at best completely unclear, and at worst downright irresponsible.

There are serious concerns here over the extent to which taxpayers in the future are going to have to pick up the tab for dealing with not just current but future nuclear waste.

DECC should come clean.

It must tell us now why it is dragging its feet over deep geological disposal and how much this will cost.

And no new nuclear plants should be built until we have an absolutely cast iron guarantee that it will be safe, and that taxpayers will never have to pay any more than they already do to manage this monstrous and effectively always deadly liability.