Monday 27 March 2017
Business, Energy and Industrial Strategy
BEIS Non-departmental Bodies
I would like to inform the House that the Nuclear Decommissioning Authority (NDA) has today announced its decision to terminate its contract with Cavendish Fluor Partnership (CFP) for the management and decommissioning of 12 redundant Magnox sites (including two research sites) which, together with the Calder Hall reactor on the Sellafield site, formed the UK’s first fleet of nuclear power stations.
The NDA ran a £6.1 billion tender process from April 2012 which resulted in a 14 year contract being awarded in September 2014 to the Cavendish Fluor Partnership—a joint venture between the British firm Cavendish Nuclear, a subsidiary of Babcock International, and the US company Fluor Inc. This decision was approved by the then Department for Energy and Climate Change and HM Treasury.
CFP started work on the Magnox estate on 1 September 2014.There then started a process to ensure that the scope of the contract assumed in the 2012 tender matched the actual status of the decommissioning to be done on each site—a process known as consolidation.
It has become clear to the NDA through this consolidation process that there is a significant mismatch between the work that was specified in the contract as tendered in 2012 and awarded in 2014, and the work that actually needs to be done.
The scale of the additional work is such that the NDA board considers that it would amount to a material change to the specification on which bidders were invited in 2012 to tender.
In the light of this, the NDA board, headed by a new Chair and Chief Executive, has concluded that it should exercise its right to terminate the contract on two years’ notice. The contract will be terminated in September 2019, after five years rather than its full term of 14 years. This termination is made with the agreement of CFP.
Dealing safely with the UK’s nuclear legacy is fundamental and non-negotiable. It is important to emphasise that this termination is no reflection on the performance of Cavendish Nuclear or Fluor, and work on decommissioning at all the sites will continue with the management of CFP for a further two and a half years.
During this period, the NDA will establish arrangements for a replacement contracting structure to be put in place when the current contract ends. This work will be led by the NDA’s new Chief Executive, David Peattie.
I have every confidence that CFP will continue to deliver to high standards during the remainder of the contract.
Although this decision is one made by the board of the NDA, it requires the consent of myself, the Chief Secretary to the Treasury and the Accounting Officer of my Department. That consent has been given.
We have a responsibility to ensure that the NDA’s decisions reflect its legal obligations, including under procurement law, that further risks to taxpayers’ money are contained and that robust arrangements are put in place to deliver this essential decommissioning programme.
In addition I can announce today that the NDA has settled outstanding litigation claims against it by Energy Solutions and Bechtel, in relation to the 2014 Magnox contract award.
The NDA was found by the High Court in its judgment of 29 July 2016 to have wrongly decided the outcome of the procurement process.
As part of the settlements, NDA has withdrawn its appeal against the judgment. While these settlements were made without admission of liability on either side, it is clear that this 2012 tender process, which was for a value of up to £6.1 billion, was flawed. The NDA has agreed settlement payments with Energy Solutions of £76.5 million, plus £8.5 million of costs, and with Bechtel of $14.8 million, plus costs of around £462,000—approximately £12.5 million in total.
These are very substantial costs and had the potential to rise much further if the case had proceeded to trial.
Taxpayers must be able to be confident that public bodies are operating effectively and securing value for money. Where this has not been achieved such bodies should be subject to rigorous scrutiny.
I am therefore establishing today an independent inquiry into the conduct of the 2012 procurement process and the reasons why the 2014 contract proved unsustainable. These are separate issues but both need to be examined thoroughly by an authoritative and independent expert.
I have asked Mr Steve Holliday, the former Chief Executive of National Grid, to lead the inquiry. The inquiry will take a ‘cradle to grave’ approach beginning with the NDA’s procurement and ending with the contract termination.
The inquiry will also review the conduct of the NDA and of Government Departments and make any recommendations it sees fit—including what further investigations or proceedings, for example possible disciplinary proceedings, may be required as a result of its findings.
The terms of reference for Mr Holliday’s inquiry will be placed in the Libraries of both Houses. Mr Holliday will report jointly to me and to the Cabinet Secretary, and his report will be made available to this House, including to the Business, Energy and Industrial Strategy Committee.
This was a defective procurement, with significant financial consequences, and I am determined that the reasons for it should be exposed and understood; that those responsible should properly be held to account; and that it should never happen again.
Justice and Home Affairs Pre-Council Statement
The first formal Justice and Home Affairs Council of the Maltese presidency will take place on 27 and 28 March in Brussels. The Home Secretary, and I will represent the UK.
Interior day (27 March) will begin with a discussion on IT measures related to border management. The presidency will provide a progress update on negotiations on the European Travel and Information Authorisation System (ETIAS) proposal and the Entry/Exit System (EES) proposal. The Government recognise the importance of increasing the security of the EU’s external borders, however as the UK is not part of the border control aspects of the Schengen agreement it will not take part in either proposal. This item will be followed by a progress update from the presidency on the implementation of the European Border and Coast Guard Agency (Frontex). Again, the UK will not take part in the new agency. However, we will continue to provide support to its operations on a voluntary basis, as we have done with its predecessor.
Interior day will continue with a debate on the EU’s returns policy. The Commission will present an action plan to improve the effectiveness of returns from EU member states to third countries, and a recommendation for enhanced implementation of the returns directive. The UK does not participate in the returns directive but welcomes the Commission communications, and the Home Secretary is likely to intervene to share UK experience and best practice in the area of returns to third countries.
Over lunch, Ministers will discuss implementation of the EU migration policy. I expect the presidency to reiterate its calls for member states to meet commitments made under relocation measures, which the UK did not opt in to, and to increase support to the European Asylum Support Agency. The Home Secretary will confirm the UK’s existing commitment to deploying asylum and border experts to support Greece.
The afternoon session will start with a short item to update on the recent activities of the Radicalisation Awareness Network (RAN). The UK is supportive of the work of the RAN to bring together practitioners, civil society and policy makers to help develop tools to tackle radicalisation.
The Council will then discuss external aspects of EU migration policy, including follow up to actions contained in the Malta declaration and the Valetta action plan. The UK supports the Malta declaration and ongoing efforts to stabilise Libya. The Home Secretary will press for concerted action to tackle organised immigration crime into and within the EU, and stress the importance of using regional partnerships, specifically the Khartoum process, to drive forward work under the Malta declaration.
Under ‘Any Other Business’, there will be an update from Austria on the “Managing Migration Challenges Together” Conference. The Commission will update on follow-up to the December 2016 EU-Internet Forum, specifically the outcomes of Commissioner Avramopoulous’ visit to the United States to discuss actions that internet companies are taking to counter terrorist propaganda and extremist content online. The presidency will also provide an update on EU responses to the European Court of Justice’s TELE2-WATSON judgment on data retention, ahead of a substantive discussion on Justice day. The Home Secretary will emphasise the importance of law enforcement experts being engaged in identifying appropriate responses.
The final substantive item of Interior day will cover a progress report from the presidency on negotiations on the reform of the Common European Asylum System (CEAS). The UK has not opted in to the majority of these measures, and is unlikely to intervene on this item.
Justice day (28 March) will begin with an update from the presidency on its proposal to convene a friends of the presidency group to facilitate a common reflection process at EU level on the impact of the TELE2-WATSON judgment on data retention. The UK is committed to working with other member states to understand the potential risks this judgment poses to investigating crime and protecting the public. I will emphasise the need to develop a common understanding on the necessity of data retention in relation to law enforcement and public safety.
On Criminal Justice in Cyberspace, the discussion will focus on strengthening and further aligning the legal frameworks and practical processes that allow access to, and the transfer of, electronic communication data to support the prevention and prosecution of crimes. I will intervene to support efforts to improve and co-ordinate member states’ capabilities in this area.
There will then be a policy debate on the criminal justice response to foreign terrorist fighter returnees. This will involve a discussion about policy recommendations made by the European Counter Terrorism Co-ordinator to tackle the threat from returning foreign fighters. I will highlight the work the Foreign Secretary is leading focused on the collection of evidence that can later be used to convict returning foreign fighters.
On combating financial crime and terrorist financing, the presidency will provide an update on the progress made at the working groups for the directive on countering money laundering by criminal law and the regulation on mutual recognition of freezing and confiscation orders. The UK is currently considering whether or not to participate in these measures.
The morning will end with an update on the progress of the negotiation of the directive on certain aspects concerning contracts for the supply of digital content. The UK is broadly supportive of the objectives of the proposal.
The final agenda item on Justice day will be a lunch discussion on the protections afforded to whistleblowers. The UK will share information on its system for protecting whistleblowers in response to presidency questions on the matter.
Boundary Commission for England: Deputy Chairman
I should like to inform the House that I have made the following appointment under schedule 1 to the Parliamentary Constituencies Act 1986:
The hon. Mr Justice Nicol has been appointed as Deputy Chairman of the Boundary Commission for England, effective from 27 March 2017 until 26 March 2020.
Bus Services Bill: EVEL
I am pleased to announce the publication of analysis of English Votes for English Laws in relation to Government amendments made at Report stage to the Bus Services Bill.
The English Votes for English Laws process applies to public Bills in the House of Commons. To support the process, the Government have agreed that they will provide information to assist the Speaker in considering whether to certify that Bill or any of its provisions for the purposes of English Votes for English Laws. Bill provisions that relate exclusively to England or to England and Wales, and which have a subject matter within the legislative competence of one or more of the devolved legislatures, can be certified.
This analysis reflects the position should all the Government amendments be accepted.
The memorandum can be found on the Bill documents page of the Parliament website at: http://services.parliament. uk/bills/2016-17/busservices/documents.html and I have deposited a copy in the Libraries of the House.
It is also available online at: http://www.parliament.uk/writtenstatements.
I am pleased to inform the House that following a rigorous competition I intend to award the South Western rail franchise to First MTR South Western Trains Limited pending the successful completion of a standstill period of at least 10 days.
The House will know that this Government are determined to transform the way that the railways work to deliver a revolution in services for passengers. In December 2016, I set out my vision for achieving this through a new era of joined up working between train operators and Network Rail. Earlier this month my Department announced a consultation on the South Eastern franchise which explained our ambition for bringing together the operation of track and train, so that one team of people is focused on providing the best service to passengers. Today’s announcement that First MTR South Western Trains Limited has been awarded the South Western franchise means we are a step closer to achieving that ambition.
The new franchise will see closer partnership working between track and train. A railway that is predominantly run by an integrated local team of people with a commitment to the smooth operation of their routes, improving services and performance is at the heart of my vision for the network, and First MTR South Western Trains Limited expects to work even closer with Network Rail with the shared aim of giving passengers exactly that. The joint teams will work to drive higher performance, achieve greater productivity in operations, improve maintenance delivery and infrastructure renewals, and support infrastructure improvement delivery, all for the benefit of passengers across the South Western network.
The new franchise will run for seven years from 20 August 2017 to 18 August 2024, with an extension of 11 railway periods callable at my discretion.
This is the 13th franchise award since 2013: a rapid programme of renewal which represents the Government’s determination to transform the travel experience for rail passengers across the country. In the last 12 months alone, new franchise agreements have released private funding for brand new trains in the north and the east of England. The new South Western franchise will also see investment in brand new and refurbished trains.
This Government are funding the biggest investment in rail since Victorian times, and the award of this new franchise is the latest step in making journeys better: simpler, faster and more reliable. Passengers across the South Western network will see improvements to their journeys, whether travelling into central London, or between the towns and cities in the southern and south-western counties of England. The new franchise will support the communities and boost economic growth in the regions it serves.
Passengers, local authorities, businesses and other stakeholders across the area contributed to a highly demanding and challenging specification for the new South Western franchise. Bidders were invited to demonstrate how they would meet this specification, and I am delighted that First MTR South Western Trains Limited set out an exciting plan for the franchise that will not only meet but significantly exceed these expectations.
First MTR South Western Trains Limited will oversee a £1.2 billion investment programme to improve services for passengers on all parts of the network from London to the south west.
There will be 22,000 extra seats into London Waterloo each morning peak and 30,000 extra seats out of Waterloo each evening peak, and a fleet of 90 new trains will provide more space for passengers on Reading, Windsor and London routes.
The plans were designed to make optimum use of our major investment to increase platform capacity at London Waterloo. First MTR South Western Trains Limited will use the experience of one of its major shareholders MTR, who operate the busy Hong Kong metro, to deliver smooth and rapid journeys for passengers travelling around London’s suburban network. Faster journeys will be delivered through a consistent fleet of new suburban trains offering a regular, metro-style service. Passengers can look forward to more space, ensuring that the railway can support London’s growth.
The train journey is only one part of the passenger experience, so we were very pleased with First MTR South Western Trains Limited’s plans for significant investment in station improvements. They will deliver at least 1,500 new car park spaces, refurbished waiting rooms, more seats and new waiting shelters. There will be investment to make Southampton Central station a destination fit for the community it serves, with a new entrance canopy, improved retail, and better facilities for passengers.
The use of smart cards will be expanded, and there will be a new smart card product, automatically offering the cheapest walk-up single or day return fare. A new flexible season ticket will benefit people working fewer than five days a week, there will be a discount offered for people buying 12 consecutive monthly season tickets, and new discounts for student travel. Season, single and return tickets will be made available on smart cards across all of the franchise.
I am pleased to announce also that the new South Western franchise will introduce new Delay Repay compensation, including for delays of 15 minutes or more, and with automatic claims for smart card season tickets and advance purchased tickets bought through their digital channels.
There will be better information for passengers, so that they can make more informed decisions about their journeys. Real time information will be available on screens on trains and at stations, as well as on the website, and through the new customer app. Station staff will also be well informed through innovative use of smart devices so they can better help passengers, especially during times of disruption. There will also be live information about seating availability and crowding levels, so that passengers know the best place to stand to board the train.
Reflecting the Government’s commitment to create 30,000 apprenticeships across all transport modes by 2020, First MTR South Western Trains Limited will offer more than 100 apprenticeships each year. Their plans also include funding to support Community Rail Partnerships, Station Adoption Groups, and to encourage community use and regeneration of available station space. The franchisee will reduce energy use at stations and depots by over 40%, and water use by over 18%.
This Government have set a clear vision for the future of rail travel and is investing to deliver on that vision for passengers across the country. Over the past few years the franchise renewal programme has resulted in significant new investment and exciting innovations for passengers. The new South Western franchise represents the next chapter in that journey and we look forward to working closely with First MTR South Western Trains Limited and Network Rail to ensure that passengers receive the improvements they have demanded as we transform their rail travel experience.