Nuclear Decommissioning Authority: Contingent Liability Notification

My hon. Friend Lord Vallance of Balham, Minister of State for Science, Research and Innovation has today made the following statement:

I wish to inform the House that the Department for Energy Security and Net Zero intends to undertake a contingent liability to provide the Nuclear Decommissioning Authority with an indemnity to cover risks arising from losses and damages to construction projects across NDA sites. The indemnity is expected to save the NDA at least £1 million per year compared to insurance premiums and will provide certainty of cover.

It is normal practice, when a Government Department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority, for the Minister concerned to present a departmental minute to Parliament giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until 14 parliamentary sitting days after the issue of the minute, except in cases of special urgency in line with “Managing Public Money”.

The indemnity covers construction projects on NDA sites against damage from terrorism, fire, flood or other natural hazards. The probability of crystallisation is low and mitigated by robust risk assessments, site access restrictions, rigid safety controls and regulations. It will cover only non-Nuclear Installation Act 1965 risks, as those are covered under the nuclear indemnity.

Construction insurance is an industry norm and the NDA has previously procured this at considerable cost. The indemnity will provide joint protection to all procured construction contractors and the NDA, but the NDA is the only one being indemnified.

The indemnity will be enduring from 1 October 2026, covering claims over £20 million up to a £650 million cap per year and with a £650 million cap per claim. Insurance will cover all claims up to £20 million. If the liability is called, provision for any payment will be sought through the normal supply procedure.

A departmental minute has today been laid before Parliament setting out full details of this contingent liability. The Treasury has approved this liability in principle. My Department will keep Parliament informed of any changes to this contingent liability as appropriate.

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