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Ukaea

Volume 229: debated on Tuesday 27 July 1993

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To ask the President of the Board of Trade what objectives he has set for the new chairman of the United Kingdom Atomic Energy Authority.

I have set objectives for the new UKAEA Chairman, Sir Anthony Cleaver, as follows:

Introduction

I am writing to set the objectives I wish you to pursue as the Chairman of the AEA. These objectives set out the general direction in which the Government wishes you to take the AEA. Specific targets in support of these objectives will be set from time to time, after consultation with you. Nothing in these objectives over-rides your responsibilities as an Accounting Officer.

Statutory Framework

The AEA's activities are undertaken within the framework of the Atomic Energy Authority Acts 1954 and 1986, the Science and Technology Act 1965, and other relevant legislation.

Aims

The AEA has, with Government support, progressively sought to increase its competitiveness, cut costs, provide better value for money for its customers and increase profitability. Good progress has been made but the AEA is operating in increasingly competitive markets, both for the work which it undertakes for the Government and for other customers.

Within the statutory framework, your prime objective is to ensure that the AEA competes effectively in these markets, develops its business to meet the needs of its customers and, in doing so earns an acceptable return on its assets. To this end, you should ensure that the AEA has a structure and cost levels that secure these objectives and subject the AEA's support activities to market testing and contractorisa.tion where appropriate. You should also ensure that the AEA has a clear market strategy and sufficient marketing and management expertise competent to deliver the objectives of that strategy. More generally you should continue the process of cultural change focusing the organisation on commercial success and recognising the key role that the development of staff has in this context.

Defined customer-contractor relations should apply to all work carried out by the AEA. As far as funding by the Department of Trade and Industry is concerned, this work will be in Programme Letters agreed with the Department or under contract and will be carried out in accordance with the terms and conditions contained in the Letters or contract. Subject to its statutory constraints the AEA should undertake work for customers, whether nuclear or non-nuclear, on the basis of an acceptable return after taking into account any related waste management and decommissioning costs and the overall needs of the business.

Within the framework of legislation and Government policy, you should ensure that the AEA explores all options for exploiting its technology, including collaboration with other organisations where this is commercially justified or where I indicate that there is a national interest in doing so. You should ensure that AEA informs the Department, at an early stage, of its plans for such collaboration. Consistent with the development of its competitive position and securing an appropriate return for its investment in R&D, I also expect the AEA to take every opportunity to facilitate the process of technology transfer particularly to small firms.

You should ensure that the AEA annually submits to the Department a Corporate Plan covering the Public Expenditure Survey period. This should contain Business Plans for the AEA as a whole and for each main business area. In particular the Plan should contain a clear strategy for reducing operating costs and identify those areas where increased resources (money, manpower, and research) are justified by prospects of future profitable business and those where effort should be reduced. The Plan should include a Capital Investment Memorandum setting out the AEA's capital expenditure proposals. It should also include contingency planning showing how the AEA would respond to different market out-turns to those assumed in the Plan.

Financial

The Government, whilst continuing to support the AEA in restructuring its operations, looks to the AEA to achieve returns that enable it to fund the costs of restructuring and make a return for the Exchequer.

I expect you to ensure that the financial target, as set by me from time to time after discussion with the AEA, is achieved.

I also expect you to ensure that the AEA stays within its External Financing Limit (EFL) as agreed from year to year and to surrender distributions of agreed sums from time to time to the ConsoLidated Fund.

Performance Targets

You should propose suitable measurable performance targets, including efficiency and quality of service targets, consistent with and complementary to the financial target for approval by the Department.

Safety

The AEA is subject to the safety requirements imposed on licensed operators by the Health and Safety Executive under the Nuclear Installations Act 1965. You should ensure that the AEA continues to have arrangements which secure at all times the highest standards in safety that are reasonably practicable in its day-to-day activities, in its decommissioning activities and in the management of radioactive waste.

Decommissioning and radioactive waste management

Decommissioning and radioactive waste management are substantial and important activities within the AEA's total sphere of operations. You should accordingly ensure that the AEA carries out its decommissioning and radioactive waste management responsibilities in the most cost effective way, consistent with safety and other requirements of the regulatory authorities.

Options for the future

I have recently set in hand a study to consider options for the future of the AEA, including the possibility of privatisation and have appointed consultants to advise me. I expect you to ensure that the AEA co-operates fully with my Department and its advisers in considering the range of options. You should also ensure that the AEA conducts its business in such a way which does not restrict those options.

Conclusion

This letter sets out the main strategic objectives for the term of your current appointment until decisions are taken on the future of the AEA. I expect to discuss each annual Corporate Plan with you, to review the AEA's achievements against the specific targets which have been set, and if necessary to set new targets in the light of this discussion and review. I will review these objectives once decisions have been reached on the future of the AEA.