Nuclear Safeguards (EU Exit) Regulations 2018

Motion to Approve

Moved by

That the draft Regulations laid before the House on 29 November 2018 be approved.

My Lords, these regulations set out the detailed legal framework for the United Kingdom’s new domestic civil nuclear safeguards regime after withdrawal from the European Atomic Energy Community, Euratom. The regulations are made under powers set out in the Nuclear Safeguards Act 2018 and in the Energy Act 2013, as amended by that Act. They will replace the current legal framework provided principally by the UK’s membership of Euratom. The territorial extent and application of these regulations is England, Wales, Scotland and Northern Ireland.

The regulations are linked to the Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) Regulations 2018, which we have just considered and passed, and they set out the definitions of “Fissionable Material” and “Relevant International Agreements”.

As explained in my earlier speech on the fissionable material regulations, nuclear safeguards are accounting, reporting and verification processes designed to demonstrate that civil nuclear material is not diverted unlawfully into military programmes. This is distinct, as I made clear, from nuclear safety or security. Our approach is to establish a regime that will be equivalent in effectiveness to that currently provided by Euratom. The regime will operate in a similar way to the existing arrangements, taking account of best practice in UK regulation-making and considering the need to minimise disruption to industry.

These regulations, together with our international agreements, allow the ONR to deliver a safeguards regime that meets our international obligations from day one of exit. The ONR’s capacity and expertise will build over time to be equivalent in effectiveness and coverage to that currently provided by Euratom, by December 2020. This will fulfil our policy intent and is the means by which the UK will exceed the commitments that the international community expects us to meet. Both the Euratom regulation and the nuclear safeguards regulations are structured to require information concerning nuclear safeguards to be supplied to the relevant entity, whether the Commission or the ONR, which the regulator may then forward, as appropriate, to the IAEA.

The Nuclear Safeguards Act 2018 passed through Parliament last year. This Act gives the Secretary of State powers to make regulations giving effect to the UK’s new domestic nuclear safeguards regime following our withdrawal from Euratom. The 2018 Act also empowers the ONR as the regulator for safeguards. ONR already regulates nuclear safety and security.

These regulations establish the requirements on operators of qualifying nuclear facilities. This covers the records an operator is required to keep, together with the forms which they must send to the ONR, including the requirement for an accountancy and control plan. The regulations also set out the provisions for the ONR, as the new safeguards regulator, when it takes on the roles and responsibilities currently provided by Euratom. Offences, transitional provisions and requirements dealing with notifications to the Secretary of State are also set out in these regulations.

My Lords, we are grateful to the Minister for his introductory remarks. This regulation was debated in the Fifth Delegated Legislation Committee of the House of Commons last Tuesday, and I want to raise an issue that was raised in that debate. The good news, which gives significant resource to Parliament, is that we have the inspectors that we need to ensure the continuity of functions after 29 March, because there had been concerns when the legislation was going through the House that we might not. The Minister gave the figures in his remarks. However, my colleague, Alan Whitehead, the shadow Minister, raised an issue in the Commons that was not replied to by the relevant Minister, Richard Harrington. He said:

“The Minister said both yesterday and today that additional inspectors had indeed been appointed and that the ONR’s recruitment target for the first phase has been met … As I understand the position, we have inspectors in place to carry out inspection to an international standard, but not to the level previously set out in the regime overseen by Euratom. The explanatory memorandum for today’s SI states: ‘It is intended that these agreements … combined with these Regulations, will allow ONR to establish a new regime which will deliver international standards from day one of exit, building, over time, to be equivalent in effectiveness and coverage to that currently provided by Euratom, and which will exceed international standards’”.—[Official Report, Commons, 15/01/19; col. 6.]

This seems to be quite a significant issue and I would be grateful if the Minister could amplify on it in his remarks. I am not familiar with the industry, but at the moment the Government take pride—and therefore, presumably, so does the industry—in the fact that our inspection standards are above international standards.

The Minister in the House of Commons said that the continuity regime after 29 March will enable us to have inspections to the international standard but not to the existing Euratom standard. It is not clear to me, and it may not be to other noble Lords, what the difference is between an inspection to international standards and an inspection to Euratom standards. However, if it is such a good thing for our industry to have an inspection to Euratom standards, presumably that is because we believe that there is some specific public purpose to be gained in having an inspection to that higher level, and that therefore there is some loss to the industry and the wider public interest in having an inspection only to international standards.

My Lords, further to the point made by the noble Lord, Lord Adonis, this is one of the reasons why the Secondary Legislation Scrutiny Committee, under the chairmanship of the noble Lord, Lord Cunningham of Felling, stated in paragraph 14 of its helpful report published on 13 December 2018 that these regulations raise issues of public policy which require them to be drawn specifically to the attention of the House.

At paragraph 11, the committee explains that it asked the department why the Euratom safeguard standards—which are higher than international standards—could not be met on day one after exit. The noble Lord’s department, BEIS, told the committee that:

“ONR aims to have the required capacity and capability to deliver a regime equivalent in effectiveness and coverage to that currently delivered by Euratom by December 2020”.

I imagine that this is a very real concern to the House. Does the Minister accept that on exit day it will not be possible to maintain the standards currently enjoyed under Euratom, and that it will take until December 2020 to do so? If that is the case, does he really think it is acceptable?

I thank the noble Lords, Lord Adonis and Lord Pannick, for restating the issue that I raised under the last statutory instrument. It is of concern to both the House and the public. Could my noble friend outline for us in what way the regime that will exist from March 2019 will be deficient relative to the regime that exists, once we reach the Euratom standards in 2020? I understand that, as of March, we will not have the required number of trained inspectors. We have inspectors sufficient for the international standards—which are lower than Euratom—but in what way would the regime be different?

My Lords, once again I thank the Minister for his introduction to and explanation of the regulations before the House. These regulations were previously the responsibility of Euratom, under the Euratom treaty. Following the UK’s departure from the Euratom community, the UK will take over this responsibility and extend the duties of the Office for Nuclear Regulation to include these. The tripartite agreement that pertained between the UK, the International Atomic Energy Agency and Euratom will be recast between the IAEA and the UK. It has been interesting to follow the developments needed to bring this regime, first, up to IAEA standards—this appears to be being achieved as we speak—and, secondly, up to full compliance with Euratom standards.

The Minister will recall the debates on the then Nuclear Safeguards Bill in scrutinising the plans and mapping out the pathway to achieve these standards on time and on budget. He will also recall the new voluntary offer agreement and additional protocol needed between the UK and the IAEA. Additionally, new nuclear co-operation agreements needed to be in place between the US, Canada, Australia and Japan. It is good to be able to confirm with the Minister that, despite these initial misgivings, the UK has largely been able to achieve all this. With the assistance of other noble Lords debating the regulations today, your Lordships’ House made an amendment to that Bill. The Government then brought forward their own amendments in the Commons to maintain co-operation with Euratom until the UK was fully compliant with all the standards necessary. I would be grateful if the Minister would confirm whether I am correct in this recollection.

However, there are one or two issues that need to be clarified in this transition to the full UK regime. First, on the readiness of the inspection regime to start as soon as possible after exit day, the ONR has been able to recruit 20 staff: 16 inspectors and four nuclear materials accountants. Can the Minister confirm whether they will all be fully trained by the end of March, recognising that many of them already work alongside their Euratom counterparts, and whether those 20 will complete the roll-call of personnel? While the Bill was going through your Lordships’ House, there was an initial estimate that between 30 and 35 would be required. I understand that the Government are confident that, from the end of March, the UK regime will be at IAEA standards. Does the Minister have a target date for the inspection regime to be equivalent to Euratom standards?

My Lords, we move to a close on the statutory instruments that I have put before the House. I will start by re-emphasising, as I think it is always important to do in debates on nuclear safeguards—which it feels I have been doing for some time—that we are talking about nuclear safeguards, and I defined them earlier. This is nothing to do with either safety or security. We are grateful for the work that the ONR does on those issues and I am sure that, whatever happens, it will continue to do that job. At the moment we are focusing purely on safeguards. I made it clear that additional inspectors would need to be recruited, and I made sure they were there to deliver a safeguards regime that the noble Lord, Lord Pannick, described as “equivalent”. I repeat that: we are looking for equivalence in effectiveness and coverage to Euratom, and the ONR will continue to recruit safeguards staff so that we can reach that.

It would probably also help if I said a little in response to the noble Lords, Lord Pannick and Lord Adonis, about how Euratom standards differ from IAEA standards. I also make it clear that reporting will continue from all operators from day one, as happens with Euratom. There is no change there—that is the equivalence we will look for. We have stated that our intention is to have a domestic nuclear safeguards regime equivalent in effectiveness and coverage to that currently provided by Euratom. That means a level of inspections and other regulatory arrangements that goes beyond the internationally agreed measures applied by the IAEA. Under the UK’s current safeguard agreements with the IAEA, all facilities containing civil nuclear material in the UK are potentially eligible for inspection by the IAEA. It chooses which are designated for inspection; it has designated two UK facilities that it currently inspects. Euratom standards, however, are applied to all civil nuclear material in the UK.

The proposals for a future UK regime are to conduct assurance and verification activities across all civil facilities, and to all other particular locations where there is civil nuclear material, as part of a proportionate and targeted regulatory regime. The new safeguards regulatory regime will cover all qualifying nuclear materials, including fissionable materials, source materials and ores. It is crucial that the UK meets its international obligations following the withdrawal from Euratom. Compliance will underpin those international nuclear trade agreements we referred to earlier—agreements with the USA, now concluded; Canada; Japan, which dates to 1998; and Australia.

I am grateful to the Minister, who is helping the House a great deal. Have I understood correctly that at the moment the IAEA inspects—in what it regards as a proportionate inspection regime—two of the UK’s facilities; Euratom inspects them all; and once we leave, only having international standards, we will inspect only some, but what we want to get to, with the Euratom standards, is its current capacity to inspect them all? If I have that right, is not the obvious point that if Euratom thinks it should have the power and ability to inspect them all, the sooner the ONR— which is, as I understand it, our domestic regulator—also has that capacity, the better? If it is not going to be until the end of 2020, let us hope to goodness that nothing happens between now and then.

The noble Lord is possibly getting confused with safety and security, and thinking not only about nuclear safeguards. We are talking about only three sites, two of which are in west Cumberland—I have forgotten where the third is, but I shall write to the noble Lord. We will continue to be compliant with IAEA standards. I appreciate that, as the noble Lord said, a slightly different safeguards regime—not safety or security—is set out by Euratom. That will take a little longer, which is why we will need not only further inspectors but nuclear accountants. We will be ready to meet the IAEA standards in March and will get up to the Euratom standards on safeguards a little later.

The Minister said that it was “only” a matter of safeguards, but does he accept that safeguards are important? Will he also accept that the inevitable consequence of what he is telling the House is that, from 29 March this year until the end of December 2020, there will a diminution in the quality of the safeguards people enjoy in this important industry? Is that acceptable?

My Lords, I shall be increasingly careful about what words I use when I speak in front of distinguished lawyers such as the noble Lord, Lord Pannick. I will try to avoid using “only” in future. What I am saying is that we will meet our standards in relation to safeguards. My reason for wanting to emphasise safeguards as opposed to safety and security is that one does not want to start creating anxiety as to whatever might happen in terms of safety and security. This measure is nothing to do with safety and security; it is to do with nuclear safeguards, which, as the noble Lord will know probably better than me, is a highly technical term—no doubt he would be able to explain it better than me. We will meet our international obligations in March this year. That is the assurance that I give to the House. It is why, when the Nuclear Safeguards Bill went through the House, it was important to noble Lords such as the noble Lord, Lord Warner, and others that we had the appropriate number of inspectors in place. I gave assurances then that we would have enough inspectors in place and I am grateful that we have been able to honour those commitments, for which we should praise and thank not me but the ONR.

The noble Lord, Lord Grantchester, asked whether it was the same regime. I am trying to make it clear that our aim is to establish a regime equivalent in effectiveness and coverage—the noble Lord, Lord Pannick, cited “equivalent”—to that currently provided by Euratom, but obviously they are not exactly the same. In many respects, it reflects and is based on Euratom regulation 302/2005—which, if the noble Lord, Lord Pannick, would like to study it, could be his bedside reading. These domestic regulations have been drafted to reflect the fact that they will operate appropriately within a UK regulatory and operational landscape. They also take account of the United Kingdom’s obligations under its relevant international agreements.

I think that deals with the issues that were raised, with the exception of costs, raised by the noble Lord, Lord Grantchester, to which I now have a response. Our transitional costs were estimated at some £10 million in the final impact assessment published with the Nuclear Safeguards Bill. The safeguards regulations’ final impact assessment gives the higher figure that the noble Lord quoted: estimated transitional costs of £28 million. This difference does not reflect an actual increase in ONR’s expected costs; the two estimates are not directly comparable, since they cover different periods. The Bill’s impact assessment did not include an implementation period as part of the withdrawal agreement running to 31 December 2020 and therefore included costs only up to March 2019. The regulations’ final impact assessment includes the implementation period and therefore includes costs incurred in that period too. I hope that the noble Lord will accept that explanation and I apologise for temporarily losing the relevant bit of paper.

The Minister has not addressed the point raised by the noble Lord, Lord Pannick, which is that we will not reach these Euratom standards until the end of 2020. Can he confirm that there will be this 20-month period where we are inspecting only to the international standard and not to the Euratom standard? As for whether it is a higher standard, the Explanatory Memorandum says that the new regime will be,

“building, over time, to be equivalent in effectiveness and coverage to that currently provided by Euratom, and which will exceed international standards”.

The noble Lord, Lord Pannick, must therefore be right when he says that inspecting only to international standards involves a diminution of current inspection regimes, otherwise it would not be the Government’s objective to exceed those standards to reach the Euratom standard.

I hope that the noble Lord, Lord Adonis, is not trying to frighten the horses; I am sure he would never want to do that. What I am saying is that we are going to meet the very high international standards of the IAEA—there were queries about this during the passage of the Nuclear Safeguards Bill—and that we will be there. We have different standards from Euratom and we will rise to those in due course. I do not see our nuclear safeguards regime being in any way at risk following that, but it is up to the noble Lord to make what he wishes of that.

When will we reach this Euratom standard?