The hotly anticipated final report of the Nuclear Regulatory Taskforce landed just before the Budget. Led by the highly respected John Fingleton, it was extremely critical of aspects of the current regulatory regime for the construction of nuclear power stations and the ‘gold-plating’ in some areas.
The Chancellor of the Exchequer announced during the Budget that the Government ‘accepts the principle of all the recommendations’. In welcome additional news, Fingleton welcomed the Prime Minister’s decision to go considerably further earlier this week. He accepted all the recommendations and pledged to extend the approach to other infrastructure as well. He committed the Government to legislating to implement the relevant Fingleton recommendations within two years.
The Nuclear Industry Association warmly welcomed the Prime Minister’s response:
The Prime Minister said it’s time to move away from “pointless gold plating, unnecessary red tape, well intentioned but fundamentally misguided environmental regulations, and, I quote – it’s quite a stark quote, he said – ‘a mindset that favours process over outcome.’”
The Government has issued a formal strategic steer to the industry, at Fingleton’s request, ‘to accelerate the safe, secure, and affordable delivery of nuclear projects across civil, defence, and decommissioning’. It also published new guidance, labelled ‘Ways of Working – principles to guide the application of ALARP and BAT in the nuclear industry’.
ALARP and BAT stand for ‘As Low As Reasonably Practicable’ and ‘Best Available Techniques’, two principles which have had dramatic effects on how civil nuclear power plants are constructed. ALARP requires the constructor to abandon straightforward cost-benefit analysis and substitute a ratio of 10:1 for some aspects and 2:1 for other aspects, as well as requiring BAT to be taken into account. The effect of the application of these regulatory principles has been dramatic with Hinkley Point C mooted to cost £46bn and Sizewell C at least £40bn in today’s money.
This note highlights two critical issues in this debate and draws the reader’s attention to a recent report by this author for Policy Exchange that suggest two key remedies that go further in attempting to remedy the gold-plating problem.
First, the review recognises the problems caused by judicial review, not least the well-known phenomenon of defensive decision making [339] made in fear of incurring judicial review and makes some sensible if minor recommendations drawing on work by Lord Banner and others [346]. They set out a case study of the effect on Sizewell C [340].
Secondly, in the strategic steer, the Prime Minister calls on the Office of Nuclear Regulation (‘ONR’) to take a novel approach to the regulation of nuclear power.
Great Britain’s nuclear safety regime is respected the world over for its rigour and independence… However, regulation must address the whole system, not just its individual parts. I expect our regulators to be active enablers of progress, while maintaining the independence of individual regulatory decisions… (emphases added)
Unfortunately, the two italicised phrases are in considerable tension. Indeed, as my report argues, asking regulators to shift their attention from a pure safety approach fails to recognise the existing structures and ONR incentives as both prosecutor and judge. This can be illustrated by the fact that the ONR report to the Department of Work and Pensions not the Department of Energy Security and Net Zero explicitly to prevent any attempt to divert the ONR’s focus on independence and safety. This aspect of the strategic steer is thus attempting to swim up a waterfall.
This author proposes two potential solutions to these problems. First, I argue that Development Consent Orders should be granted using Hybrid Acts of Parliament, modelled on those used to build the railways in Victorian times, that cannot be judicially reviewed.
Secondly, I argue that an independent body called the Nuclear Regulatory Tribunal should be created, with a High Court judge as chair, that can weigh up regulatory disputes between the ONR and constructors with a strict time limit measured in weeks, applying a cost-benefit analysis and with no further legal challenge save for a rigidly time limited appeal to the Upper Tribunal, solely on points of law.
If implemented, these two measures would – at a stroke – radically cut the length of time these projects take. It is a little-known fact that fully two thirds of the project costs of nuclear plants is accrued interest on the capital spent during the process – sometimes it is more.
Urgent and serious measures are needed to expedite the construction of a fleet of nuclear power plants, deploying both large scale reactors such as Hinkley Point C and Sizewell C plus possibly designs approved by trusted regulators abroad, as well as Small Modular Reactors, in particular the Rolls Royce model currently being approved. The Fingleton report is a good start. Much more needs to be done.