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House of Lords Hansard
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Nuclear Safeguards Bill
01 March 2018
Volume 789

Committee (2nd Day)

Relevant document: 13th Report from the Delegated Powers Committee

Clause 1: Nuclear safeguards

Amendment 7

Moved by

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7: Clause 1, page 2, leave out lines 41 to 45 and insert—

“(9) Before making any regulations under this section, the Secretary of State must—(a) consult —(i) the ONR,(ii) the International Atomic Energy Agency,(iii) the National Audit Office,(iv) such other persons, if any, as the Secretary of State considers it appropriate to consult, and(b) lay before Parliament a written statement declaring that, after consultation with the above parties, the Secretary of State is satisfied that the ONR—(i) has sufficient staffing and financial resources to implement nuclear safeguards regulations, and(ii) is sufficiently independent to implement nuclear safeguards regulations.(9A) The statement under subsection 9(b) must be laid before both Houses of Parliament.”

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My Lords, there is ongoing concern over nuclear safeguard regulations—more accurately, both Houses are generally concerned at the deluge of regulations resulting from the Brexit legislation—and there has rightly been a great deal of criticism. This amendment seeks to put further protection around the regulations to give assurance. That assurance needs to take two forms. First, in advance of any regulations, the Secretary of State must seek the views on said regulations of interested parties and responsible bodies, such as the ONR, the Atomic Energy Agency and the National Audit Office among others.

Secondly, after that consultation, the Secretary of State must lay before Parliament a Written Statement that assures that the ONR has sufficient staffing and financial resources to implement nuclear safeguard regulations. That begets a question which I hope the Minister will answer when he responds. At the beginning of this process we need to set the benchmarks for staffing and resourcing. To do that, we need to understand, on the record, what both the IAEA standard and the Euratom standard of implementing nuclear safeguarding will require in the way of staffing and resourcing.

At Second Reading in this House and in the other place, concern was expressed about what would be achievable by 29 March 2019, and the view was expressed that the ONR would not be ready on day one. Can the Minister confirm that, on day one, the standard that the Government are expecting is that of the IAEA? Can he also put on record what the IAEA standards of nuclear safeguarding are, what staffing is needed to deliver those standards and what resource has or will be made available to the ONR to deliver those standards?

Can the Minister then confirm how long after reaching the IAEA standards he would expect the ONR to reach the Euratom standard of implementing nuclear safeguarding? Given that Euratom holds to a higher standard than the IAEA, can the Minister tell us how many more staff the Euratom standard will require? Can he also put on record what level of extra resource that will require, and can he assure the House that the extra funding between the two standards will be available on demand? The Government have made clear that Euratom is their intended standard, if not on day one then on a later date.

In his letter of 20 February the Minister makes it clear that there are currently 11 safeguards officers in post who are training to become inspectors by 29 March 2019. He also states that the ONR estimates that it will take 20 safeguard inspectors to deliver its functions to a standard equivalent in effectiveness and coverage to Euratom. As I have said, the Government have been clear that their intent is to reach the Euratom standard—but, worryingly, the Minister goes on to say in his letter that reaching the equivalent Euratom standard is dependent on a wide variety of factors. That seems very loose. Can the Minister enumerate what the “wide variety of factors” is, as it cannot be left open-ended?

Moving beyond the nuclear standard regulations and their resourcing, we are concerned that the ONR must be wholly independent of its paymasters. We cannot have a situation where the Government can influence or hold any sway over this organisation. It must be unfettered in its implementation of nuclear safeguard regulations, and the reporting structure must ensure that the Secretary of State cannot direct the ONR. Can the Minister reassure us on that point?

Finally, can the Minister assure us that the statement on these issues, as amended, will be laid before both Houses of Parliament? I beg to move.

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My Lords, I support this and the other amendment in the group. One of the concerns we have, as expressed on the first day in Committee and at Second Reading, is about disclosure of the actions and steps that have been taken by the Government to meet the undoubtedly genuine, real and merited concerns that have been expressed about the process of leaving Euratom and this Bill.

In that context, I thank the Minister very fully for the letter he wrote to me on 28 February, which has been placed in the Library, relating to the activities that have taken place between the Government and the IAEA, the European Commission and various third countries, which he named in the letter. He has provided a wealth of information which enables us to understand more about the part of the process with which it deals. The amendments seek disclosure about other parts of the process.

Although I support the amendments, I do not regard it as necessary for statutory provisions to be created to provide the information that is set out. What I do regard as essential is a similar generous and helpful approach by the Minister in which the items set out in the two amendments are the subject of an undertaking that the Government will keep the whole of Parliament fully informed about the process and progress of discussion of the items referred to. That is not an unreasonable demand, but is the least the House can reasonably expect.

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My Lords, I agree about the importance of consultation, as noble Lords will know, and also about the proper resourcing of the ONR. However, I am nervous about the precedent set by proposed subsection (9)(b) in the amendment. It would be very difficult if this was established as a new approach to SIs. As the Minister knows, resources are sometimes constrained when you bring in new legislation, but that is not a reason not to proceed with regulations. I recall milk quotas, where a vast amount of administrative work was involved—but that did not mean to say that it was not right to proceed with that part of EU policy at that time.

It is also not clear how many people will need to be involved in resourcing work. I accept that this is a problem in the nuclear area, but I would guard against putting that sort of provision into legislation—although it might be that the amendment is purely exploratory. I very much agree that we need comfort on resourcing for the ONR, and I thought that the Minister gave us some comfort when he last spoke.

I have another question for the Minister about transition. The draft withdrawal agreement published yesterday covers Euratom—slightly to my surprise, because I believed and hoped it would be in a separate instrument. But that is as it is; it is in the draft document. I am interested to know, since the document also covers transition, whether that means that Euratom will be part of any transition agreement likely to be agreed in the coming weeks and months. Confirmation of that would be helpful because it bears on some of the other concerns we have had about the process of bringing nuclear safeguards into UK law—and of course the resourcing and the time for the ONR to do a proper job are critical.

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My Lords, I discern from the letter sent on 20 February by the Minister to the Lords who have participated in the various stages of the Bill so far that the Government intend to impose most of the costs of a nuclear safeguarding regime on the civil nuclear industry. It is clear that the regime will deal mainly with matters that are remote from the everyday concerns of the civil industry. Therefore, it seems inappropriate that it should be asked to bear most of the costs. Be that as it may, it is appropriate that it should be consulted regarding provisions of statutory regulations. This is not what is being called for directly in the amendments. However, unless the Government signal clearly that they intend to consult the industry, this is something they should be enjoined to do by an amendment to be brought forward on Report.

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My Lords, I support what my noble friend, Lady Neville-Rolfe, just said. I would also be cautious about including in the Bill a requirement to ensure that there should be sufficient staffing, because it is not a good reason to decide whether to put in a certain control. Obviously everything the Government undertake to do must be properly staffed.

I ask the Minister to confirm whether the Government consider that a transition period will be necessary for Euratom as well as for the EU generally. I had understood that the Government expected to put in place a satisfactory accredited nuclear safeguards regime before March next year, although I understand that certain doubts have been expressed about whether that is feasible in the time available, given the necessity to obtain the consent of various other countries’ legislatures, with which we would have to establish new nuclear co-operation agreements. Could the Minister tell the Committee whether a transition period for Euratom is envisaged?

I question what the noble Baroness, Lady Featherstone, said about Euratom standards being better than IAEA standards. I understand that the Government’s intention and commitment is ultimately to reach Euratom standards, but I am not sure there is any evidence that Euratom’s standards are better than IAEA standards. Two weeks ago at a briefing by a representative of EDF, together with the NIA, we heard that, in his opinion, the safety standards set by the IAEA are more robust on process, procedures and controls than those set by Euratom and that Euratom concentrates heavily on verification processes that may or may not add anything to achieving a satisfactory level of safeguards. I look forward to hearing the Minister’s comments on that.

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My Lords, I strongly support my noble friend’s amendment, but want to follow up what was said by the noble Lord, Lord Carlile, who made the obvious point that the more the Government keep us in touch with what is going on, the more confidence everybody, including the industry, has; we might then avoid half the debate we have every time we discuss Euratom. That is true of the whole process of EU withdrawal, but if we could just get it right in this niche area of Euratom, we could save the Government, Ministers and Parliament a whole load of time just by understanding what is going on.

To be honest, I think the Government undersell their position in this area in all sorts of ways. I thank the Minister, the noble Baroness, Lady Vere, for her letter to me in response to my question at the end of the last session about the transition for Euratom, because, so far as I could see, there was no disagreement between Brussels and the UK about it. The noble Baroness’s letter effectively confirmed that. In the legal draft framework on withdrawal and transition, there is a whole area on Euratom—I read it through yesterday; I do not have it here. In terms of the EU-UK relationship, the withdrawal from Euratom, particularly in respect of the transitional period, seems fairly well agreed, and I welcome that. The difficulty I still have is around third parties. There has been good communication on where we have got to with nuclear co-operation agreements, but I am still unclear as to whether the International Atomic Energy Agency and third countries are happy to accept that, while not being a member of Euratom, we can still use all those provisions as a safeguarding regime.

I also noted in the document the expectation of the UK to come up to Euratom standards on nuclear safeguarding. I would be very interested to hear the Minister’s explanation of that and what it means for the transition and withdrawal process.

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My Lords, I do not wish to put a dampener on proceedings, as the word “transition” seems to have lifted your Lordships a little, but does the Minister agree that for there to be a transition there needs to be agreement between the United Kingdom and the European Union on the terms of leaving the European Union and that, in the event of there being no agreement, we go into a period where there is no transition? If that is true, I refer your Lordships to that little lecture I gave on risk on the previous day in Committee: there remains a finite risk that we need a safeguarding regime in March 2019. This provision does not take the pressure off us to get this sorted out and to have a process that delivers the safeguarding regime we need, whether or not the prospect of transition is increased.

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I want to speak to Amendment 18, which is in our name, but also to respond to Amendment 7, in the names of the noble Lords, Lord Fox and Teverson, and the noble Baroness, Lady Featherstone, on the Liberal Democrat Benches. Amendment 7 would specify in new Section 76A(9) further consultees the Secretary of State must consult before making any regulations and add the requirement to lay before Parliament a Written Statement on the resourcing and preparedness of the ONR. In conjunction with the other amendments taken last week on Euratom and the UK’s levels of standards, we agree that this would be most useful. However, it may not go far enough, in that it would be the Secretary of State doing the interpretation of any evidence received and judging its sufficiency. Notwithstanding the comments of the noble Viscount, Lord Trenchard, and the noble Baroness, Lady Neville-Rolfe, these matters were debated last week and it would be the Government making the declaration. The Committee was not inclined to take at face value many of the Government’s assurances last week. Unfortunately, I have not seen the recent letter to the noble Lord, Lord Carlile, nor the letter from the noble Baroness to the noble Lord, Lord Teverson. I request that in future the whole Committee be copied in to the letters, so that we can keep abreast. Many thanks.

Amendment 18 does not mention staffing levels or the independence of the ONR, however this last important matter is the subject of a further amendment, in my name and those of my noble friend Lord Hunt and the noble Lord, Lord Warner, which is about funding the ONR appropriately and goes further than seeking government assurances. Prospect, the trade union for nuclear engineers and specialists, has stated that the Government have already cut the ONR’s budget in recent years and that now more than 90% is funded by industry, a figure the Government confirmed in that letter to Peers dated 20 February. Are the Government going to play fair by this industry? Are they committed to the industry?

In the letter of 20 February, the Government say they will allocate to the ONR the funding necessary to establish the new domestic civil nuclear safeguards regime. In the Written Ministerial Statement of 2 February, the Government state that they have secured £2.275 million for this purpose ahead of UK withdrawal from Euratom. Is this enough? Will the Government confirm that it is the full figure that will be needed to cover the list claimed in the letter of 20 February; namely, establishing and running a project team, procuring an IT system, recruiting and training inspectors, drafting the regulatory framework, providing technical support to the department’s international negotiations, as well as the asset purchases of existing Euratom equipment in UK facilities? Prospect believes that a figure nearer to £10 million would be more realistic, especially to complete the necessary asset purchases, and is concerned that this would not fund the decommissioning costs inherent in the equipment being purchased. Will the Minister clarify the full amount of the investment inventory needed for the UK’s safeguarding regime, the commensurate full cost and that all of it will be funded?

Then there is the ongoing running cost of operating the monitoring and inspections that are presently funded by EU budgetary contributions of £9.5 million a year. The industry is very concerned that the Government will require it to self-fund the safeguarding amount in addition to funding already passed to it for safety and security. The costs of Brexit should be disclosed in full and the Government should play fair by the industry. The Minister agrees, in his letter of 20 February, that they will carry out a full consultation, including close engagement with industry and key stakeholders. Are the Government willing to show their commitment? In answering these questions, will the Minister clarify the position of ownership and retained rights of EU customers to UK operations, such as uranic material at URENCO in Cheshire, that EU customers have the right to use? This could cause operational difficulties of physical segregation. I would be quite happy if the Minister were to write to me on this last, technical note.

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My Lords, as we are in Committee, it may be helpful if I quote article 77 of the draft treaty published by the European Commission yesterday, which is specifically around nuclear safeguards. It states:

“The United Kingdom shall implement a safeguards regime applying a system offering equivalent effectiveness and coverage as that provided by the Community in the territory of the United Kingdom until the end of the transition period”.

That accepts that there is to be a transition period, as long as we are not in a no-deal situation. There is a transition period—there is no disagreement between us and the EU about that—but the EU expects that to be at Euratom standards. I cannot see that that can be any different if we remain within the acquis during that period, which I think both sides are agreed to anyway.

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My Lords, I start by offering my apologies to the noble Lord, Lord Grantchester, as he did not receive a copy of that letter. I will make sure that copies are made available. I thought that I had arranged for copies of all the letters—those I sent on the 20th, the one on the 28th to the noble Lord, Lord Carlile, and the one from my noble friend, I think again on the 28th, to the noble Lord, Lord Teverson—to be placed in the Library. After 40 years in this House, I still do not quite know exactly what that means—I think one can go along to the Library and get a copy, but I leave that to noble Lords. I will certainly make sure that copies are made available to all those who want them.

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One does not wander to the Library just in case there might be something there, so it would be useful.

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I fully accept that. I think the idea is to make it clear that they have been made public and are available. I will make sure copies are made available to noble Lords.

Before dealing with precise matters relating to the amendment, I shall say a word or two about the implementation period and transition because that was raised by my noble friends Lady Neville-Rolfe, who has great experience in this matter as a former Minister in the department that I have the honour to represent, my noble friend Lord Trenchard and the noble Lord, Lord Teverson, who was in receipt of a letter from my noble friend Lady Vere. The second paragraph of that letter sent on the 28th stated that details and terms of an implementation period have yet to be agreed, that it is assumed that the United Kingdom will no longer be a member state of the EU or the EEA during the implementation period, that the base case for the length of the period is around two years and that the UK will continue to mirror the EU acquis—the entire EU legal framework—during that period.

We also note that the Commission has published its draft of the withdrawal agreement. The noble Lord, Lord Teverson, referred to this. It is just a draft at the moment. The exact content of the United Kingdom’s withdrawal agreement from the EU will be a matter for negotiation, and we are working hard to deliver the best possible outcome for the UK while making good progress on negotiating our deep and special future partnership with the EU. I do not think I can take the noble Lord or the Committee any further on that matter at this stage.

Amendments 7 and 18 ask for much greater consultation to be set down in law. My noble friend Lady Neville-Rolfe was rather worried by the precedent, should it be enacted, that we make a Written Ministerial Statement at certain stages. I hope I can give the appropriate assurances about what we intend to do to keep Members of the Committee and the House fully informed about what we are doing over the course of the coming year.

First, I shall clarify my Second Reading response to a question from the noble Lord, Lord Hunt of Kings Heath, I think, about the potential cost to industry of the new regime. I referred only to the cost to the ONR of setting up the domestic regime. The department has already committed to allocate to the ONR the funding necessary to establish the new regime. In respect of ongoing funding—the matter which this amendment is aimed at addressing-–I can make a clear commitment now that a decision on cost recovery and charging arrangements will be subject to close engagement with industry and other key stakeholders, as well as public consultation.

We intend to publish a public consultation and an impact assessment on the regulations later this year. I repeat to the Committee that we have made those regulations available in draft already. It is estimated that the ongoing costs of operating a domestic safeguards regime—

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Can the noble Lord give an assurance to the Committee that the industry will not be penalised as a result of Brexit—that is to say that the contributions that will be required of it post Brexit to fund the new regulatory regime that he has been describing will not be greater than any costs that it currently incurs under the present Euratom regime?

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The noble Lord will obviously not expect me to give firm commitments of that sort in advance of any consultation. This is a matter for consultation, but we are talking about the need to make sure we have the appropriate safeguarding regime. We are already charging industry, as he puts it, for the cost of safety and other matters. As I said, I will not give any commitment of that sort because this is a matter for consultation, but I will say that the ongoing costs of operating a proper domestic safeguarding regime—I am not talking about safety or security, but purely about safeguarding—will be broadly in line with the current cost to Euratom of its safeguards activity in the United Kingdom. This is estimated to be about £9.5 million a year, as set out in the impact assessment for the Bill.

I turn to the outstanding issues raised in Amendment 7. As the Committee will be aware, the Bill already requires that before making regulations under new Section 76A of the Energy Act 2013, the Government must consult the ONR and any other persons the Secretary of State considers appropriate. This is consistent with the approach for making nuclear regulations under Section 74 of the 2013 Act, which the noble Baroness will be familiar with. The amendment seeks to include a duty to consult both the IAEA and the National Audit Office. I agree wholeheartedly with the importance of consultation on the new domestic regimeI stressed that at Second Reading. Consultation is of vital importance in the development of any new regulatory system and even more so with a subject of such national importance.

As I have already made clear, we have published a pre-consultation draft of the regulations and have already begun early engagement with the industry on this. Prior to this, and since the referendum, the Government have had detailed and ongoing discussions with the nuclear industry and other interested parties. We have made it clear that the development of these draft regulations establishing the new regime will be subject to detailed consultation with both the regulator and industry, with which we have already been engaging.

The Committee will be aware that it is not standard practice for the Government to consult international bodies such as the IAEA on matters of detailed domestic legislation, and for good reason. The IAEA’s focus and expertise in respect of the United Kingdom’s safeguards lies with the voluntary international agreements rather than with the domestic legislation underpinning the domestic regime. The amendment also proposes including the NAO. I believe the NAO plays an incredibly important role, but I do not think that mandatory consultation, as proposed by this amendment, is appropriate, as it already has an established process for scrutinising public spending for Parliament.

We look forward to continuing to work closely with industry and other stakeholders to take the development of the new domestic regime forward. I particularly welcome, at this stage, any comments noble Lords make on the draft regulations, which were published in January and which I imagine all those interested in the Bill have been studying with great care ever since.

Amendment 7 would also require the Secretary of State to lay before Parliament a Written Statement that the ONR has the capacity and independence to implement a new safeguards regime. Again, the Committee will be aware that the Government have already committed to provide Parliament with quarterly reports on progress from across the Euratom programme. They will include information on ONR capacity and readiness.

We accept the immediate importance of this issue; that is why I wrote to all Peers on 20 February. I hope that the noble Lord, Lord Grantchester, received it and I think others did as well. I wrote twice on that day to all noble Lords and I have copies of those letters, but I do not think it is necessary to refer to them. At the same time, a bit later I also wrote to the noble Lord, Lord Carlile. Again, I have that letter available here and will make it available to other noble Lords if—

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In the Library?

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I will make it available in the Library, as well as to other noble Lords who want copies of it.

To summarise briefly what I tried to set out in that letter, and for the benefit of the Committee, we are working closely with the ONR to ensure that it will be in a position to regulate the new safeguards regime. The ONR is in the process of expanding its safeguards function by recruiting and training additional inspectors, building additional institutional capacity and developing the necessary IT systems. I want to stress—having made a visit to Sellafield, which has two of the three sites in this country where nuclear safeguarding takes place, with a senior representative from the ONR and others—that on the information given to me it is my assessment, based on current progress, that the ONR will be in a position to deliver to the international standards as required by the IAEA on withdrawal from Euratom in a year’s time, in March 2019.

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At this stage, I intervene only to ask: is the Minister aware of the full costs of all the measures to be implemented to enable the ONR to go ahead with this regime, or is that work still in progress?

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As I said earlier, we think that the costs will be broadly in line with the current costs of what we pay to Euratom, which is £9.5 million a year. But there may be certain funds to pay for the changeover, which again I dealt with at Second Reading by saying that money would be made available for it. Ongoing costs will be broadly in line with where we are, and that will be satisfactory.

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I apologise for coming back to the Minister but, as I understand it, we are talking about two items. One is the ongoing cost of £9.5 million, which I quite agree is defined already by the EU’s contributions to us for the Euratom programme. I meant the full cost of the set-up, which initially had a £2.275 million contribution from the contingencies fund. What does he think the full cost will be, and is he happy and confident that it will be kept within that contingency fund? Has he now completed the inventory and can he update us on what the full cost may be of implementing all the measures necessary?

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I think I answered that question at Second Reading and gave a figure to the noble Lord. Rather than trying to guess or remember what I said on that occasion, I will write to him. But I am perfectly happy that we have made that commitment. There will be sufficient funds and then there will be ongoing costs—the noble Lord is right to distinguish between the two—and again, we are happy about that.

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When the Minister writes that letter, and assuming we all get it, can he please include some indication of the Euratom assets that will be assumed by the new organisation and some estimate of the liability that comes with those assets?

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Obviously the noble Lord is right that assets belonging to Euratom are in there. I do not think I am giving away any secrets if I say that on my visit I saw physical things that were Euratom assets; there will also be software and other things. I am sure that deals will be done as part of the negotiations, and some of those will be transferred over. I do not think I can go any further at the Dispatch Box and I would not want to, but if there is anything more that I can say in a letter then I shall. I will make sure that my letter goes to all noble Lords by whatever means in this inclement weather—we will get it to the noble Lord—and place copies in the Library, which is where people like to find them.

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Email is also very useful these days.

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My Lords, we have discovered email. I can use all possible methods.

I have given the assurance that I will ensure that noble Lords are kept informed. As I think I have made clear, I do not think the amendments are necessary or, for that matter, particularly helpful, and I hope the noble Lord will accept that we will do our bit to keep all noble Lords appropriately informed of these matters and will make the precise Written Statements that are necessary at the appropriate moment. With that, I hope the noble Baroness, Lady Featherstone, will feel able to withdraw her amendment.

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Having listened to the debate across the House, I think it appropriate that I ponder what the Minister has said. For the moment, I am happy to beg leave to withdraw the amendment.

Amendment 7 withdrawn.

Amendment 8

Moved by

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8: Clause 1, page 4, line 3, at end insert—

“( ) In section 156 of that Act (commencement), after subsection (3) insert—“(3A) Section 112(1B) expires at the end of the period of two years beginning with the day on which that section comes into force.””

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I shall also speak to Amendment 13 in this group. At Second Reading we on these Benches drew attention to the powers that the Government wish to confer on themselves through the Bill. At that time we signalled that we would take into consideration the views of your Lordships’ Delegated Powers and Regulatory Reform Committee on the Bill. The committee has now reported its findings in its 13th report of this Session, drawing attention to three areas of concern. My noble friend Lord Hunt highlighted the first in an amendment last week, that “civil activities” should be defined under new Section 76A(5) in Clause 1(2) of the Bill.

Amendments 8 and 13 draw attention to the other issues drawn attention to in the report. Amendment 8 concerns the definition of “relevant international agreement” in the power conferred on the Secretary of State under new Section 76A(1)(b) to give effect to any future relevant international agreement. When this happens, the functions of the ONR are extended to include taking the necessary steps to ensure compliance with that agreement. In the present situation where the Government are in negotiation with the IAEA and several key partners, the report does not find it unreasonable that the Government extend their powers in this way. However, the committee is correct when it states that this should not result in the Government having an enduring power into the future, long after the UK has withdrawn from the Euratom treaty.

Amendment 8 would set a sunset provision so that in new Section 112(1B) in the Energy Act 2013 these powers may not be exercised after a period of two years from withdrawal from Euratom. This two-year period would reflect Clause 8(4) of the European Union (Withdrawal) Bill, where powers to amend legislation to prevent breaches of international obligations arising from the EU withdrawal will cease two years after exit day. This comfortably sits alongside any transition period that the Government are set to announce, maybe as early as tomorrow, in response to the announcement yesterday by the EU Commission.

Amendment 13 concerned the powers being conferred on Ministers under Clause 2 of the Bill to amend the legislation listed under Clause 2(1) relating to nuclear safeguards. The memorandum prepared by the department for the Delegated Powers Committee explains the provisions and agreements between the UK, the IAEA and Euratom. At Second Reading it was acknowledged that these tripartite agreements would need to be replaced. Necessarily, the voluntary offer agreement, the VOA, and additional protocol, AP, will become ineffective on the UK’s withdrawal from the Euratom treaty.

As in Amendment 8, the committee agreed that the Government may take the powers to amend both primary and secondary legislation to ensure compliance with the UK’s international obligations after withdrawal. However, once again, there is no justification in the memorandum for these powers to continue indefinitely. We agree, and therefore Amendment 13 similarly sets a sunset provision to Clause 2: that the powers to be conferred cease after two years and may not be exercised following the end of that period.

At Second Reading, the Minister replied that he would look carefully at any recommendations forthcoming from your Lordships’ Delegated Powers Committee, and I would appreciate hearing from his noble friend that they will bring forward government amendments on Report to give effect to these recommendations. I beg to move.

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I support Amendments 8 and 13 and do not intend to speak at length. When the Minister was responding to Amendment 6 in the Committee’s previous sitting, he expressed a high degree of approval of the Delegated Powers and Regulatory Reform Committee, and I trust that that continues through these amendments. The case has been set out by the noble Lord, Lord Grantchester, and the DPRRC, and I hope that on these two amendments the noble Baroness can give us similar encouragement to that given by the Minister on Amendment 6. We on these Benches support the restricted use of these measures to give the Government the flexibility that they need. This is a good compromise between untrammelled power and the power they need for the flexibility to ensure the necessary regime.

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My Lords, I thank the noble Lords, Lord Grantchester and Lord Fox, for their contributions. The amendments apply sunset provisions to two key powers in the Bill, Amendment 8 in respect of new Section 112(1B), which enables the Secretary of State to specify in regulations international agreements relating to safeguards that should be treated as “relevant international agreements”, and Amendment 13 in respect of the Henry VIII power in Clause 2.

I am grateful to the Delegated Powers and Regulatory Reform Committee for its considered report on the Bill. We are considering the recommendations carefully, and my noble friend Lord Henley hopes to respond positively to many of the recommendations soon.

I welcome the principles that appear to be behind these amendments, namely those of scrutiny, certainty and restriction of powers. However, as the underlying purpose behind these powers is very different, the proposed two-year sunset clauses must be considered in each context specifically.

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The noble Baroness may accuse me of being pedantic, but she said that her noble friend “hopes” to be able to respond. Does that really mean “expects” to be able to respond, or is it merely a hope? If it is an expectation, most of us will be content; if it is merely a hope, we will be troubled.

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My noble friend Lord Henley has just whispered “expects” to me.

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I am most grateful.

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Noble Lords will recall that I updated the House last week, during the first sitting of this Committee, on the progress the Government have made in discussions on our new agreements with the IAEA and key NCA partners. These discussions provide important context for the amendments as, despite having made significant progress, we do not expect all of them to have been concluded by the time of the Bill’s passage through Parliament.

Amendment 13 would apply a two-year sunset provision to Clause 2, which contains the power to amend the Nuclear Safeguards and Electricity (Finance) Act 1978, the Nuclear Safeguards Act 2000 and the Nuclear Safeguards (Notification) Regulations 2004. It can amend these pieces of legislation only in consequence of a relevant safeguards agreement.

This is a narrowly drawn power to amend references in that legislation to provisions of safeguards agreements with the IAEA. Those references enable the IAEA to carry out its activities in the UK, including by providing the IAEA with legal cover for the UK activities of its inspectors. It is essential that the legislation specified in Clause 2(1) of the Bill can be amended to make correct reference to new safeguards agreements that the UK enters into with the IAEA.

The 1978 Act and the 2000 Act are extremely unusual in that they make detailed references to specific provisions of existing international agreements. As such, these references are likely to change—the numbering may change to specific articles—as a result of any amendment of or change to these agreements. The power in the Bill is therefore necessary to make the changes to the relevant Acts to update those references when the new agreements are in place.

The proposed sunset clause recognises the necessity of retaining the power in Clause 2 while seeking to limit the period of time for which it can be used. In its report on the Bill, the Delegated Powers and Regulatory Reform Committee said that there was a good case for the Government,

“to have powers to amend both primary and secondary legislation to ensure that the UK will comply with its international obligations upon withdrawal from Euratom”.

However, the report highlights that the power is currently indefinite and recommends a two-year sunset. As I have mentioned, we very much welcome the Committee’s view of the powers in the Bill. We are still in the process of considering its recommendations and expect to be able to respond positively on this particular recommendation shortly.

This very narrow power cannot be used outside a very narrow range of purposes and circumstances. It is not a power we are taking just in case; it is absolutely essential and underpins the entire regime. The matter of negotiations means that we are tied to timing uncertainties, and this power constitutes the only way we can address that uncertainty. However, we are considering carefully how we might set a time limit on this provision, and we hope—we expect—to be able to give a definitive response on this by Report.

In relation to Amendment 8, the Government also note that the Delegated Powers and Regulatory Reform Committee report made a similar recommendation to sunset the power to give effect to relevant international agreements. I cannot accept this amendment, as the need for this power goes beyond the immediate impact of withdrawing from Euratom. I think it is important to emphasise that the very nature of safeguards—a critical non-proliferation measure—is international by design. The power this amendment relates to therefore goes beyond “fixing” issues arising from Brexit. At its core is the need for the new safeguards regime to be able to adapt to the inevitable international changes that are made—for example, IAEA recommendations that the UK adopts, or new NCAs.

Even the current regime, which is heavily reliant on Euratom’s international role, provides for this type of flexibility through Section 93(2)(d) of the Energy Act 2013. The Bill repeals Section 93, reflecting the change in the regime, and the flexibility to incorporate international safeguards commitments in the new legislation is indeed drawn more narrowly. I shall give an example of the type of international change we might see in the future: we expect to agree NCAs beyond those with the four countries in the first tranche. Where such NCAs require particular nuclear safeguard reporting measures, it is vital that our regime can accommodate that—both in the scope of the ONR’s purposes, and in the scope of the relevant regulations—without significant uncertainty or delay. I stress that the power to which the “relevant international agreements” relates is specific to nuclear safeguards. The power is there to ensure that we can incorporate additional reporting obligations resulting from international commitments into our safeguards regime: I do not think we could claim to have an effective, future-proofed safeguards regime if new primary legislation were required every time we entered into a new agreement that included new safeguards obligations.

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I thank the Minister for giving way. She has just referred to every time that we have a new agreement, but could she give us an estimate beyond the two-year period of how many additional agreements she would expect to have to insert into the regime?

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Of course, it is very difficult to be specific on that but, as we know, we are focusing on four NCAs in the first tranche. The noble Lord will know that there are many other countries with which we would like to have an NCA in future which perhaps do not fall within the first tranche. The second thing to recognise is that this is not just about entering into new NCAs; it is whether new obligations arise as conditions change within the international community for safeguarding. This gives us the flexibility, but it is not drawn so widely that we can do whatever we like.

While we cannot accept Amendment 8, I would like to provide reassurance of the scrutiny that will be in place to ensure that there is proper oversight in the use of this power. Pursuant to the Constitutional Reform and Governance Act 2010, we would expect any new international treaties relating to safeguards to go through the ratification processes set out in that Act. Use of the power to make regulations specifying agreements as “relevant international agreements” is itself subject to the draft affirmative procedure in all cases, and any regulations made under the power that relies on these agreements must be consulted on. I am therefore confident that an appropriate level of scrutiny and restriction of powers is already in place.

I recognise the principles which lie behind the proposed amendments, and I hope that noble Lords will accept why I cannot accept them today. I therefore hope that the noble Lord, Lord Grantchester, feels able to withdraw his amendment.

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I thank the Minister for that very full response and am grateful, too, to hear the whispers between her and the noble Lord the Minister on the Front Bench. Our expectations are always full of hope, but I am rather troubled by her response to Amendment 8, and we will need to consider her reply very carefully. I am not sure that the power should be enduring. However, she said in her response to the noble Lord, Lord Fox, that it is important that there continues to be scrutiny and oversight of these agreements. We will study her response very carefully. In the meantime, I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

Clause 1 agreed.

Amendment 9 not moved.

Amendment 10

Moved by

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10: After Clause 1, insert the following new Clause—

“Freedom of employment for specialists

Article 2(g) of the European Atomic Energy Community Treaty, ensuring freedom of employment for specialists, continues to have effect in UK law in relation to those who work in nuclear safeguarding, after the United Kingdom leaves Euratom.”

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My Lords, let me say first that the last thing that I would expect—and this will be a great relief to the Government—is for this amendment in its current state to be in the final Act as it is passed. It is in many ways a probing amendment, but an absolutely critical and important one. I quote Article 2(g) of the Euratom treaty to which this amendment relates. It says that the Community shall,

“ensure wide commercial outlets and access to the best technical facilities by the creation of a common market in specialised materials and equipment, by the free movement of capital for investment in the field of nuclear energy and by freedom of employment for specialists within the Community”.

So it is all around being able to take advantage of that freedom of movement of nuclear specialists, particularly as this amendment has to relate to safeguarding only—but really it is much more general than that, into the future and beyond our withdrawal from the Euratom treaty.

One great privilege that I have in this House is to chair one of the European Union Select Committee sub-committees, the EU Energy and Environment Sub-Committee. We have undertaken a number of Brexit reports over the last year, including on environment, energy security—from which I shall quote in a minute—agriculture and fisheries and animal welfare. We are currently looking at food security. One key theme of all those reports, very much on a cross-party basis, is the issue of supply of specialist labour after Brexit has taken place, and how a number of those sectors, from agriculture right the way through to the nuclear industry, are dependent on specialists. Those specialists are not always the great and the best and the Nobel Prize winners whom we want in this country, but they are the people who have their own specialist skills in things that you would not necessarily take degrees in—particularly in the agricultural sector—and we can take advantage of those skills because they are not available in the United Kingdom.

I just give one or two examples from our report Brexit: Energy Security, for which we are still waiting a government response—which is not overdue at the moment, I would add. The noble Lord, Lord Rooker, quoted these examples on our previous day in Committee, but I will go back through some of them, particularly around energy security and the nuclear industry workforce. In paragraph 41 of the report, we quote EDF, which stated:

“The highest concentration of non-British nationals as a percentage of the total employed workforce is within Nuclear New Build”.

Angela Hepworth, the corporate policy and regulation director of EDF provided some detail saying, on Hinkley Point, which is new nuclear,

“we are going to need 1,400 steel fixers. At the moment, the total population of certified steel fixers in the UK is 2,700 so we would need more than half of the total”.

The Institute of Mechanical Engineers stated that,

“the nuclear sector relies heavily on skilled workers from Europe”,

as did the Centre for Nuclear Engineering at Imperial College London:

“The free movement of skilled professionals within the nuclear industry is critical to its long-term success”.

Energy & Utility Skill told us that,

“any new immigration policy must avoid arbitrary distinctions between ‘higher’ and ‘lower’ skilled jobs, based on inaccurate criteria such as whether or not it requires a degree”.

I am well aware that this is broader than safeguarding itself, but safeguarding is also a part of that nuclear skill set and this is the only way that I could really get this in the Bill, because our safeguarding regime is a key area where we have this challenge. I emphasise again that I am quite satisfied that the UK and EU 27 can come to an agreement on a transitional period that gives us extra time; I am relaxed about that, but I am not relaxed about the point made by my noble friend Lord Fox that, with the other issues that there are around the withdrawal treaty—not least around Ireland—the possibility of coming to no deal has perhaps gone up. We still need to have a strong contingency so that we are ready in this area by 29 March next year.

The only way that I can see for us to do that is to make sure that we continue freedom of movement for nuclear specialists beyond our withdrawal from the agreement. On this, I remind the Government that the nuclear industry is one of the key sectors identified in their industrial strategy and, if that is to be fulfilled, we need to make sure that freedom of movement continues in this area—and, I would say, more widely than just safeguarding.

My question to the Minister is: will BEIS have enough backbone to really confront the Home Office, and perhaps No. 10 as well, on this issue, because the Home Office is naturally resistant to anything to do with migration? Will we be able, through the discussions between BEIS, the Home Office and perhaps No. 10, to make sure that this freedom of movement within the nuclear industry, not least in the safeguarding sector, continues after Brexit? I beg to move.

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My Lords, I commend the noble Lord, Lord Teverson, for this amendment. I also commend his sub-committee, which has done excellent work.

I looked with great interest at some pieces of evidence submitted to the committee, particularly that from Energy UK, which made the point that,

“Overall, the energy industry’s workforce is made of between one and five percent of EU/EEA employees”.

That is not a huge percentage, but Energy UK makes the point that,

“Although there are not a proportionately large number of non-UK nationals employed within the energy industry, the majority are employed in skilled roles which are difficult to fill from the UK resident workforce”.

The noble Lord, Lord Teverson, has already cited the evidence of EDF and referred to steel fixers. Interestingly, EDF examined the impact of restrictions on freedom of movement on its current workforce when thinking about what challenges might arise in the future. EDF said:

“For EDF Energy direct employees, … the majority of our current employees would meet the existing UK Points Based System requirements. The same cannot be said for our supply chain workforce, most of whom would not meet the current entrance criteria”.

This is a very important issue because, if freedom of movement is restricted, there is currently no route of entry for semi-skilled workers, such as construction workers, to enter the UK under the existing points system. I find it surprising that steel fixers are not classed as skilled workers, but the fact is they are not, so they would not be able to come in under the points-based system. Yet we have heard from EDF that we simply cannot meet the demands of constructing Hinkley C nuclear power station and other civil engineering demands with the number of steel fixers that we have.

The noble Lord, Lord Teverson, ended his remarks with an interesting question about the backbone of the Minister’s department. I do not think it has had a particularly easy ride. I know that it has done its best on visas for overseas students but has come up against an obdurate brick wall in the shape of the Prime Minister. But can we hope that there will be a positive response on this issue, as it is so crucial to our future industrial strategy?

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My Lords, I accept that this is a probing amendment and that the noble Lord wanted to go wider than the Bill itself and beyond safeguarding to problems facing the entire nuclear industry, and in particular the need for skilled workers. The noble Lords, Lord Hunt of Kings Heath and Lord Teverson, are worried about whether I and the department have sufficient backbone to take on the Home Office and others in these matters. I give him an assurance that we accept the importance of getting the right skilled workers in, just as we always have. I understand the importance of that because on my recent visit to Sellafield I saw some of the construction work and how very specialist it is. It is not just the skilled workers but the type of concrete that has to be used and all such matters—other noble Lords will know this far better than me. More generally on that point, BEIS knows that there are shortages in certain areas and will do its bit within government to make sure that the Home Office understands the importance of our being able to attract the right staff more generally.

On the question of having the right staff in the very specialised field of nuclear safeguarding, the amendment attempts to ensure freedom of employment for specialists employed in that area. That is obviously a matter of particular interest in the light of the Government’s preparations for establishing the domestic nuclear safeguards regime which, among other important work, means securing high-quality safeguards staff in the right quantity for the ONR.

We are working very closely with the ONR to ensure that it is in a position to regulate the UK’s new civil nuclear safeguards regime that will follow withdrawal from Euratom. That includes, among other preparations, recruiting and training additional inspectors and building additional institutional capacity. I have already outlined the ONR’s staffing numbers and estimates. I referred to that in the letters sent on 20 February—so all noble Lords should have had copies of those, even the noble Lord, Lord Grantchester.

Given the importance of attracting the right staff to work in this specialist field, the Government are committed to ensuring that the United Kingdom nuclear industry has the required skilled personnel to deliver robust regulatory regimes. The Prime Minister has been clear that we will always welcome those with the skills and the expertise that we need, whether they come from Europe or the rest of the world—as we do now. We will also ensure—if the noble Lord will bear with me—that we manage our immigration system in the way that best serves the national interest. That is why we will be using our best influence with the Home Office—and I am sure that the Home Office in due course will be able to respond. I give way now to the noble Lord.

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Picking on the language, the Minister talked a number of times about skilled people. The noble Lord, Lord Hunt, made the point that the definition of “skilled people” is the problem. Will the Minister acknowledge that issue and carry that point in the discussions he is having with other agencies?

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As I said, we are in discussions with the ONR in relation to the Bill to make sure that it can get people with the appropriate very specialist skills that we need for safeguarding. That is why we are going to have the right regime in place by next year.

The noble Lord then asked me to go further on the more general point—it might be construction for the nuclear industry or a whole host of other things. Yes, BEIS will continue to operate as it always does and to offer help and guidance to the Home Office as it develops policy in this field.

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For information, some of the researchers who work in the nuclear fusion project, for example, are paid below the threshold that gives them the privilege to come into this country. We are not just talking about steel fixers but about quite serious researchers who, because they have taken an academic career, are not paid above the threshold. So it is a very serious issue.

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I am fully aware of the concerns of the noble Lord and of the industry. Obviously it is a matter for the Home Office to develop these policies, and I am very grateful that a Home Office Minister—just by chance—happens to be sitting near me; she will listen to this and take it back to her colleagues. I repeat that we are satisfied that we can deal with safeguarding. Our concerns, the noble Lord’s concerns and other concerns will be dealt with. Proposals for a future immigration system will be set out shortly. That is something that my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy will play his part in.

The noble Lord said that his amendment was a probing one. I hope that I have given the appropriate assurances for him to withdraw it.

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I thank the Minister for his response. No doubt this debate will continue when we debate the Brexit and energy security report on the Floor of the House. I will just say—to all Ministers who are present—that the whole of history tells me that this is going to be a very difficult ask. It seems obvious, in terms of getting it right for the nation, that it ought to happen, but I suspect that it will be a lot more difficult than perhaps the Minister hopes. I will reflect on the answer and see whether there is anything more exacting we can say on Report—but at this stage I beg leave to withdraw.

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Before the noble Lord withdraws his amendment, as he said he would, I have noted that this debate has been entirely about new build, but surely one of the great problems in this area will be the experts needed for decommissioning.

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I thank the noble Lord for his contribution. He is absolutely right. Experts are needed not only for decommissioning but for keeping going the existing fleet of nuclear power stations, which provide some 20% of low-carbon energy to our energy system at the moment. We also need nuclear co-operation agreements so that we have not just people but spare parts and everything else for this sector. I can see that the Minister wishes to intervene.

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I just want to interrupt the noble Lord to offer him one further statistic to indicate how long this will continue. Again during my trip to Sellafield, I was reminded that decommissioning there will continue well into the next century—in other words, the grandfathers of the people who will be working on it then have not yet been born.

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The whole area of the financing and decommissioning of Sellafield is the subject of another debate—and a contentious one—which we will not get into. At this stage, I beg leave to withdraw my amendment.

Amendment 10 withdrawn.

Amendment 11

Moved by

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11: After Clause 1, insert the following new Clause—

“The ONR to become a Non-Ministerial Government Department

(1) The Energy Act 2013 is amended as follows.(2) In section 74, omit subsection (3)(a).(3) In section 77, after subsection (2) insert—“(2A) The functions of the ONR are performed on behalf of the Crown.(2B) In the exercise of its functions the ONR is not subject to the direction or control of any Minister of the Crown or of another government department.(2C) But subsection (2B) does not affect—(a) any provision made by or under any enactment; or(b) any administrative controls exercised over the ONR’s expenditure by the Treasury.”(4) In section 85—(a) in subsection (1), omit “with the consent of the Secretary of State”; and(b) omit subsection (3).(5) In section 86, omit subsection (6).(6) In section 89, omit subsection (6).(7) In section 92—(a) omit subsections (1) and (2); and(b) in subsection (5) omit “(1) or”.(8) In section 93—(a) omit subsection (2)(d); and(b) omit subsections (3) to (5).”

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My Lords, in moving this amendment, I want to explore the status and independence of the ONR. I have great respect for the ONR and its work, and I wish to enhance its status.

In this crucial area of nuclear safeguards, the ONR will replace Euratom in overseeing the UK’s obligations to meet international nuclear safeguard standards, ensuring that civil nuclear material is not diverted into military or weapons use. This is a distinct responsibility and is separate from the ONR’s current role in relation to nuclear safety. Essentially, the ONR will be policing the UK in respect of its international commitments, and on that basis its independent status needs to be enhanced.

A Cabinet Office memorandum of 2014 made the situation clear:

“Non-ministerial departments do not have direct ministerial accountability. Their need for independence from ministers is … greater than for NDPBs, and includes regulators and tax authorities”.

They are government departments in their own right. The memorandum continued:

“There will be a ‘sponsor minister’ who has residual policy responsibility for the continued existence of the non-ministerial department, the overall policy and statutory framework within which it operates, and represents the non-ministerial department in Parliament. However, a non-ministerial department operates independently of ministers, generally receiving funding directly from Parliament”,

negotiating with Her Majesty’s Treasury,

“and is accountable directly to Parliament”.

My argument is that the ONR should be established as a non-ministerial government department to recognise the important new responsibilities that it has been given. Some of the bodies that have that status—the Competition and Markets Authority, the Crown Prosecution Service, the Food Standards Agency, HMRC, Ofsted and Ofgem—have been considered by one Government or another to have needed that status to show that they are robustly independent. Looking at nuclear safeguard responsibilities, there is a very strong case for enhancing the status of the ONR in that way, and I hope that the Minister will be sympathetic. I beg to move.

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I support Amendment 11. Part of Amendment 7 said something similar. It is very important that we are satisfied on this point so that we know for sure that there can be no interference and no misdoings—if that is the right word.

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My Lords, as the noble Lord, Lord Hunt, knows, I am always sympathetic, particularly to his amendments. On this occasion, what he wants are some reassurances, as does the noble Baroness, Lady Featherstone, about the genuine independence of the ONR and, importantly, that the IAEA sees it as an independent body and accepts it as such. I hope that, quite briefly, I will be able to provide those reassurances.

We have international obligations to ensure that the regulator is effectively independent. The provisions of the 2013 Act, which created the ONR and which I am sure the noble Lord knows well, were specifically designed to ensure that the ONR had appropriate independence. Those measures to guarantee its independence include providing it with independent public corporation status; significant restrictions on the Government’s ability to direct the ONR in the exercise of its functions; constraints on the conditions for dismissing senior ONR members; and transparency obligations that act as a safeguard against powers—which are already constrained—being used in an improper manner.

Noble Lords will be aware that as a public corporation the ONR is able to set its own employment terms and conditions, affording it greater freedom and flexibility than if it were a non-ministerial government department. If it were such a department, ONR employees would be civil servants, the organisation would be part of government and the level of its independence would arguably be more limited than it is now. The noble Lord, however, obviously takes another view.

In the factsheet we published on 19 February, we made it clear that the ONR is independent from government in its regulatory functions and decisions. The most important point to stress—this deals with the entire matter and goes to the core of the amendment—is that the International Atomic Energy Agency reported in 2013 that the Energy Act 2013 would,

“provide de jure independence, which will reinforce the de facto independence that ONR (and its predecessors) have enjoyed for many years”.

It is important that we listen to what the IAEA said; I cannot stress how important this is. The amendment the Committee is considering attempts to unpick the arrangements that the IAEA—the international body responsible for nuclear safeguards worldwide—considers provide the independence necessary for an effective regulatory safeguarding regime.

Having established that the ONR is independent, I would also like to note that, as well as fulfilling international obligations and best practice, this independence is crucial for the industry. It is important that the industry has recourse to appeal ONR decisions. Attempting to fundamentally change the ONR’s relationship with the Government by explicitly providing that the ONR acts on behalf of the Crown—the effect of the amendment—risks moving away from an approach deemed appropriate by the IAEA and would undermine the industry’s ability to hold the regulator to account.

I do not think I need to go any further than that. In the interests of time, it is probably best that I end there and ask the noble Lord whether he wants at this stage to withdraw his amendment. I hope that I have given him the appropriate guarantees.

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That has been a very helpful response and I am grateful to the Minister. However, I disagree with him: it is clear from the Cabinet Office guidance that a non-ministerial government department has more independence, whatever the status of officials. But he has given me considerable reassurance, for which I am most grateful, and I beg leave to withdraw my amendment.

Amendment 11 withdrawn.

Clause 2 agreed.

Amendments 12 to 14 not moved.

Clause 3 agreed.

Clause 4: Commencement

Amendments 15 to 18 not moved.

Clause 4 agreed.

Clause 5 agreed.

Schedule agreed.

House resumed.

Bill reported without amendment.