Document

NORTHWEST NUCLEAR –

A STRATEGIC APPROACH to the NUCLEAR SECTOR in the REGION

April 2006

Northwest Nuclear April 2006

Table of Contents

1. INTRODUCTION AND SCOPE 1

2. BACKGROUND TO THE UK NUCLEAR SECTOR 3 2.1 Nuclear Power Generation 3 2.2 Waste Management 4 2.3 Nuclear Decommissioning 4 2.4 Employment and Economy 4 2.5 The Key Players 5

3. THE NUCLEAR INDUSTRY IN THE NORTHWEST 8

4. DRIVERS FOR CHANGE 10 4.1 Decommissioning 10 4.2 Waste Management 12 4.3 Future Energy Policy 13 4.4 Other Drivers 14

5. IMPACTS 15 5.1 Employment 15 5.2 The Decommissioning Supply Chain 16 5.3 Skills 16 5.4 Research and Technology 17

6. A STRATEGIC APPROACH 19 6.1 Introduction 19

6.2 Six Strategic Themes 20 6.3 Implementation 26

7. CONCLUSIONS 29

Annex 1 - Regional PartnersAnnex 2 - Glossary

Northwest Nuclear April 2006

EXECUTIVE SUMMARY

With approximately half of the UK’s 40,000 nuclear sector employees in the region, the Northwest has become the UK centre for civil nuclear science and technology, fuel fabrication and spent fuel reprocessing.

The sector is dominated by the operations at Sellafield in West Cumbria, which together with the adjacent sites at Calder Hall, Windscale and Low Level Waste repository site at Drigg employs some 12,000 people. Other important sites in the region are the Springfields Fuels Ltd fuel fabrication facility near Preston, the central administration and engineering functions of British Nuclear Group at Risley near Warrington and British Energy’s power station at Heysham with around 1000 people. There are around 300 Northwest companies who are part of the nuclear supply chain.

No new generation plants have been constructed since Sizewell, which was commissioned in 1995. Whilst current energy policy does not foresee any new build, the government has recently announced a comprehensive energy review against increasing concerns about exactly how the UK will meet its commitments to curb greenhouse gas emissions. This review will be completed in 2006 and the key question for the review is the opening up of a new nuclear build programme. With construction costs of around £2 billion for a typical 2,000 MW power station there would be significant economic opportunities for the region should there be a new nuclear build programme.

Future nuclear waste policy is another area of uncertainty and the government has established the Committee on Radioactive Waste Management (CoRWM) to recommend solutions for the long-term management of high and intermediate level waste. CoRWM is due to make its recommendation in July 2006 and one possible option would be an underground repository which would be a major opportunity for the Northwest in terms of its design and construction and the supporting Research and Development (R&D) that will be required.

The recent focus has been on decommissioning the 20 nuclear sites that remain in public ownership and the Nuclear Decommissioning Authority (NDA) was formed in April 2005 to manage this process over the forthcoming decades. The latest estimates put the cost of the decommissioning liabilities at £63 billion and the NDA is currently spending some £2billion/year. The Northwest sites account for approximately 65% of this expenditure and much of the activity is centred on Sellafield where the current spend on operations and decommissioning is £1 billion/year.

Although the NDA’s primary responsibility is to ensure that decommissioning is carried out safely it also aims to ensure the process is carried out at least cost and is introducing more competition to the decommissioning process. The NDA has now assumed ownership of the 20 sites and the former owners BNFL and UKAEA are now ‘Tier 1 contractors’ responsible for management and operations (M&O). These M&O contracts will be put out for competitive tender in due course and competition is being cascaded down the supply chain. Much of the work that the Tier 1 contractors currently undertake in house will be put out to tender. A major consequence is that many of the smaller companies who previously worked directly for BNFL or UKAEA will now become Tier 3 contractors and will have to competitively tender for work with Tier 2 companies. This change will present business challenges for smaller companies who may have limited management resources.

Northwest Nuclear April 2006 i

Although projections until 2015 show relatively stable employment numbers at Sellafield, the major impact of decommissioning will be falling levels of employment which will be particularly acute in West Cumbria where around 8,000 jobs are expected to be lost over the next 25 years. In addition, the workforce required for decommissioning and ongoing activity will require new skills and adapt to provide flexible employment arrangements and older.

Although the main focus of this strategy is related to the civil nuclear programme, the BAE Systems shipyard in Barrow is the only UK facility for the design, construction and commissioning of nuclear powered submarines. This facility supports around 3,000 employees and a unique capability in nuclear reactor construction. However, uncertainties over future MOD procurement may well place this capability at risk.

Whilst research skills are fundamental to the future success of the sector, UK funding for nuclear fission research has declined over the past two decades. However, the UK still has leading expertise and facilities based in the Northwest. The Dalton Institute for postgraduate education and research has recently been established at the University of Manchester and there are world-class research facilities at Sellafield, which are operated by Nexia Solutions (BNFL’s R&D subsidiary). The challenge for the region is to build upon these assets with one possible solution to create a ‘National Nuclear Laboratory’ in the Northwest.

The NWDA, in consultation with stakeholders and partners has developed this strategy, which outlines how relevant public and industry bodies will support the sector over the next five years. The starting point for the strategy is a vision for the region:

A world-class region of excellence in nuclear technology through demonstrable achievement in decommissioning, radioactive waste management, nuclear energy generation and research and development.

To achieve this vision action needs to taken under 6 key strategic themes.

1. Strategic Relationships

2. Attracting Investment

3. Supporting Supply Chains

4. Skills and Research

5. Enterprise and Innovation

6. Influencing Infrastructure

These themes have been developed taking into account of the current industry outlook, a review of available evidence, the views of a range of stakeholder groups and lessons learned from projects already underway. The short-term activities are largely driven by needs of decommissioning and adapting to the more competitive environment that is being introduced. For the longer term the Northwest must work to position itself to best advantage

Northwest Nuclear April 2006 ii

pending the decisions surrounding new nuclear build and waste management. The actions under each theme are summarised below;


As a region the Northwest needs to fully engage with all elements of central government’s nuclear policy. The NWDA has already established a strong working relationship with the NDA DEFRA and DTI. All these relationships must be maintained and strengthened and new relationships established especially in the areas related to waste management and with the MOD’s nuclear submarine procurement programme.


The NDA has established its headquarters in West Cumbria and many potential contractors are locating around them. The region must continue to support inward investment and relocations and seek to attract companies from outside the nuclear sector to West Cumbria, Cheshire and Warrington. The development of a National Nuclear Laboratory will be supported, which would act as a focal point for UK R&D investment in civil nuclear power generation.


A National Nuclear Skills Academy will be established with new training provision in West Cumbria. The Dalton Institute and development of the Westlakes Research Institute will also address higher level skills.

4. Supporting Supply Chains

We will build upon the existing business support and develop programmes that address the specific issues associated with the restructuring of the nuclear decommissioning supply chains. SMEs will require assistance with the new NDA tendering procedures on enhancing business development activities. Support will also be provided to assist diversifying into new markets and into decommissioning work in other parts of the World.


Many of those leaving the industry will be highly skilled and well qualified. Support will be provided to encourage business start ups.

Innovation will also be supported to assist firms developing new opportunities for technologies and services developed for nuclear applications in new markets. Firms will also be separately developing new products and solutions for the nuclear market.


The movement of people, data, ideas and goods will continue to be vital to the Nuclear Sector in the region. Communication between West Cumbria, the rest of the region and national & international gateways will be particularly important, as will the capacity to continue to securely and safely transport nuclear material to and from west Cumbria. The links to national infrastructure will continue to be important.

Northwest Nuclear April 2006 iii

Government has recently requested the Northwest (together with the other English regions) to identify regional transport priorities as part of future spending allocations. This exercise is being carried out by NWRA, NWDA, GONW will take into account the needs of the nuclear sector.

The implementation of this strategic approach will depend upon a number of bodies in the region. It is not the intention, nor the role of NWDA to deliver all these separate activities. NWDA’s role will be to work with partners to co-ordinate the region’s activity through the Nuclear Opportunities Group and lead the process of regularly reviewing priorities as the UK’s policy develops.

Northwest Nuclear April 2006 iv

1. INTRODUCTION AND SCOPE

The development of a strategy for the nuclear sector in the Northwest is timely, as the civil nuclear programme moves into a phase of environmental restoration and as the government moves to support a long-term solution for waste management. The future of UK energy policy will also be subject to a review in 2006, which raises the possibility of construction of new nuclear generation capacity. The region requires a clear and integrated approach to these issues all of which will have a significant impact on the sector, setting these in the broader context of the economic development of the Northwest.

The aim of this strategy is to ensure that the regional public bodies working in partnership with the industry act in a concerted and effective manner to ensure the success of the sector in the region, contributing to the wider economic development goals of the Northwest. Although the NWDA has led the development of this strategy, it will be implemented by a range of public and private organisations, frequently working in partnership.

Even if there is no new build, decommissioning and environmental restoration needs alone will ensure that the nuclear industry is an important and vital part of the Northwest economy. Whilst the Northwest has only one operational nuclear power station at Heysham, virtually the entire fuel manufacture and reprocessing infrastructure that supports the UK’s civil nuclear capacity is located in the region. The Northwest is also a leading international region for nuclear science and engineering and if new build is a serious possibility the Northwest is strongly positioned to take the UK lead in system selection, licensing and deployment. The BAE Systems shipyard in Barrow is the only site in the UK where nuclear powered submarines are constructed and there is considerable expertise in nuclear powered propulsion systems.

From a regional economic development viewpoint, the significance of the nuclear industry is wider than the prospects for companies and organisations engaged in the sector alone. In West Cumbria in particular, there are major socio-economic implications associated with the dominant position of the nuclear sector in the economy combined with the relative geographical isolation. Therefore, the declining employment in the nuclear sector in West Cumbria presents a particular challenge. This is addressed in the Regional Economic Strategy1 and by Cumbria Vision’s sub-regional strategy.

There have already been significant activities in support of the regional nuclear sector, many of which are on going. For example a number of regional public bodies successfully lobbied for the Nuclear Decommissioning Authority to be based in the Northwest, West Lakes Renaissance have developed a number of nuclear specific business support activities and the Dalton Centre for nuclear research has been established at the University of Manchester. The strategy is based upon comprehensive evidence and analysis of the current state of the nuclear industry in the region, the industry’s future outlook and the views of public and private sector stakeholders.

1 http://www.nwda.co.uk/RelatedContent.aspx?&area=100&subarea=476&item=20063274801819097

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In particular this strategy draws upon several recent pieces of work that have been commissioned by the NWDA and partner organisations:

• Development of The NWDA Nuclear Industry Strategy (by AD Little)

• Mapping the Nuclear Supply Chain (by ERM Economics)

• International Nuclear Supply Chain Capability Study (by TNEI)

• National Nuclear Academy and Nucleus Business Plan (by Tribal)

• Northwest Science Strategy2

This strategy sets out a number of short to medium term actions to be taken by the relevant public sector bodies. In the short term these are mainly aimed at ensuring that the Northwest captures the maximum economic benefits associated with decommissioning. However, this strategy also recognises the potential longer-term benefits associated with a possible new build programme and a solution to the UK’s long-term waste storage.

2 http://www.northwestscience.co.uk/


2. BACKGROUND TO THE UK NUCLEAR SECTOR

2.1 Nuclear Power Generation

Much of the early design and construction work associated with the UK’s civil nuclear programme took place in the Northwest; the first commercial power reactors were built at Calder Hall (Cumbria) and fuel cycle manufacturing facilities were established at Capenhurst (near Chester), Springfields (near Preston) and Windscale (Cumbria). These fuel production operations were separated from UK Atomic Energy Authority (UKAEA) to form British Nuclear Fuels Limited (BNFL) in 1971.

As nuclear power generation was expanded from the 1950s with the construction of Magnox and advanced gas-cooled reactors (AGRs), many of the design and construction companies were based in the Risley area. The Magnox reactor technology required the reprocessing of irradiated fuel, which was carried out at BNFL’s Sellafield facility. Similarly many of the support activities for the UKAEA experimental fast breeder reactor programme at Dounreay were carried out in the Northwest.

In 1978, BNFL commenced construction of a new thermal oxide reprocessing plant (Thorp) at Sellafield for reprocessing irradiated fuel from the UK’s AGR fleet. This opened up commercial opportunities from overseas customers, most notably in Japan. This development led to the substantial expansion of the Sellafield site and the creation of marine fuel transport routes through port facilities at Barrow-in-Furness.

During the 1990s BNFL built its Sellafield Mox Plant (SMP), which recycles plutonium (mixed with uranium) into ‘Mixed Oxide Fuel’ (Mox) reactor fuel. The SMP was developed as an extension to the Thorp plant for overseas business and enabled the return of separated plutonium to overseas customers in the form of new fuel assemblies.

Following the 1988 Energy White Paper ‘Privatising Electricity’ all the UK’s state owned oil, gas and coal fired power stations were moved into the private sector. However, there were a number of uncertainties associated with costs of nuclear generation (high capital costs, decommissioning and nuclear waste management) and concerns over the operation of the AGR stations. For these reasons, plus uncertainties over the costs connected with the financing of new PWR stations nuclear power was removed from the government’s privatisation plans. Subsequently, in 1996, the more modern stations (the seven AGRs and Sizewell B) were privatised as part of British Energy and the older Magnox plants remained in the public sector under BNFL ownership.

In addition, the decision was taken to terminate the experimental fast reactor programme at Dounreay, which ceased operation in 1994. Large parts of UKAEA, including many of its resources at Risley, were sold off, first in a stock market flotation of AEA Technology (AEAT) and then through a subsequent divestiture of AEAT’s nuclear divisions, to RWE Nukem and Serco.

In the late 1990s the government also intended to partly privatise BNFL, which had developed into a commercial fuel cycle business through the acquisition of the nuclear engineering interests of Westinghouse (USA) and the Swedish company ABB. It was also part of the successful consortium (with Serco and Lockheed Martin) that was appointed to run the AWE facility at Aldermaston. However, the privatisation plan was never implemented given the very significant liabilities associated with the business.


Despite the fact there has been no new build of nuclear generation capacity since 1995 nuclear power remains an important contributor to the UK’s energy supply generating around 21% of total electricity.

The possibility of a new nuclear build programme remains unanswered; the 2003 Energy White Paper stated that it might be reviewed at some future date if there proved to be unsatisfactory progress towards meeting CO2 emission goals. However, the question of a new nuclear build is a key question in the recently launched Energy Policy review3, which is expected to make its recommendation summer 2006.

2.2 Waste Management

Currently there is no clear long-term policy for nuclear waste. Most low-level waste (LLW) is sent to the LLW repository at Drigg in Cumbria for burial; all Intermediate Level Waste (ILW) is held in storage around the country at the sites where it was produced and High Level Waste (HLW) is held at either Sellafield or Dounreay. In 2001, the government established the Committee on Radioactive Waste Management (CoRWM)4 to carry out a review of the options for managing radioactive waste. The priority is to recommend how to manage the HLW and ILW for which no long-term management strategy currently exists. CoRWM has been engaged in a comprehensive consultation exercise and is due to make its recommendations by July 2006.

In 2005 DEFRA initiated a national stakeholder consultation on low level and decommissioning wastes. A formal consultation will be undertaken by March 2006 with a proposed LLW policy issued in June 2006.

2.3 Nuclear Decommissioning

The most significant recent development in the sector was the formation of the Nuclear Decommissioning Authority (NDA), which became operational in April 2005. The NDA was created under the Energy Act 20045 to take responsibility for the UK’s nuclear legacy and manage the decommissioning process of nuclear sites. It marks an important turning point for the industry in addressing the long-term issues associated with decommissioning.

2.4 Employment and Economy

In addition to the 12 operational nuclear reactors that generate electricity there is a comprehensive infrastructure around the nuclear fuel cycle; uranium enrichment, fuel assembly fabrication, spent fuel reprocessing, radioactive waste management and storage. The UK also has extensive research expertise around the design and operation of civil nuclear power generation. The civil nuclear sector currently contributes around £3.3 billion to UK GDP, employing 49,0006 people, with about half located in the Northwest.

3 http://www.dti.gov.uk/energy/review/index.shtml

4 http://www.corwm.org.uk

5 http://www.legislation.hmso.gov.uk/acts/acts2004/40020--b.htm#4

6 Cogent Market Assessment Final Version, 2003 (http://www.cogent-ssc.com/research_and_policy/documents/MARKET_ASSESSMENT.pdf). This work estimates the total employment in the nuclear sector at 56,000 of which 7,000 are employed in defence related operations.


http://www.corwm.org.uk/

http://www.legislation.hmso.gov.uk/acts/acts2004/40020--b.htm#4

2.5 The Key Industry Players

2.5.1 The Nuclear Decommissioning Authority

With effect from 1st April 2005 the ownership and the liabilities of the BNFL Magnox power stations, research facilities and fuel processing operations were transferred to the Nuclear Decommissioning Authority (NDA). For the next two or three years these sites will continue to be managed and operated by the incumbent operators (BNG, Westinghouse and UKAEA) but thereafter these contracts will be tendered on the open market. The overall NDA programme includes the decommissioning of 20 publicly owned civil nuclear facilities. The undiscounted lifetime operational and decommissioning costs of these sites are currently estimated at £63 billion (Ref. Section 4.1).

The role of the NDA is captured in their mission statement7, which is ‘to deliver a world class programme of safe, cost-effective, accelerated and environmentally responsible decommissioning of the UK’s civil nuclear legacy in an open and transparent manner and with due regard to the socio-economic impacts on our communities’. The aim of the NDA is to create a strong competitive supply chain to support the decommissioning programme and a new structure for the supply chain has been outlined:

• Tier 1: Site Licensee Company responsible for site management and operations.

• Tier 2: major project sub contractors to the Tier 1 contractors. Tier 2 contractors could, for example, undertake the design and execution of large projects at a site.

• Tier 3 Sub contractors and suppliers to either Tier 1 or Tier 2. This may be highly specialised work or may include general support services.

In the context of NWDA activity it is important to note that the Energy Act 2004 also places obligations on the NDA to carry out additional supporting activities relating to the decommissioning process, key of which are;

• To ensure that communities in the vicinity of decommissioning sites gain socio-economic benefits;

• Education and training; and

• To conduct and promote research related to decommissioning and remediation

The NDA headquarters are located in West Cumbria with a number of satellite offices around the UK including one based in Warrington. Following an intensive recruitment campaign the NDA is expected to be operating with a full complement of around 220 staff by April 2006.

2.5.2 BNFL

BNFL is a public limited company wholly owned by the UK government with an annual turnover of some £2.3 billion (2004/5). It operates globally but its headquarters are located at Daresbury near Warrington and over half its 23,000 employees are located in the Northwest. BNFL’s current activities span the entire nuclear fuel cycle from reactor design,

7 Strategy – Draft for Consultation, Nuclear Decommissioning Authority, September 2005 www.nda.gov.uk


plant operation, fuel manufacture/reprocessing, decommissioning, remediation and R&D covering the entirety of the nuclear fuel cycle. Following the establishment of the NDA there was a major reorganisation and the group now operates three divisions:

• British Nuclear Group (BNG) is the specialist clean-up business, focused on the management, clean up and decommissioning of UK nuclear sites acting as the Tier 1 contractor to the NDA. Through its Spent Fuel Services group, BNG is also responsible for fuel reprocessing contracts and transport of nuclear material. Currently BNG employee just over 13,000 people with the majority in the NW.

• Westinghouse provides fuel, technology, plant design and supporting services to the worldwide nuclear electricity industry, with 8,000 employees worldwide (1,400 based in the NW)

• Nexia Solutions (formerly NSTS, BNFL R&D division) is a new business group that provides R&D and scientific services. Activities are mainly based around the newly constructed technology centre and laboratories at Sellafield but with significant numbers of personnel based at Springfields and Risley. Nexia employs approximately 800 staff all in the NW.

The sale of the Westinghouse division to Toshiba for £3.1bn was announced in February 2006 with completion due by autumn 2007. This sale represents the first step in a major restructuring of BNFL with the intention to sell BNG announced in March 2006.

2.5.3 UKAEA

The UKAEA pioneered the development of nuclear power in the UK. It is a non-departmental public body responsible to the DTI and as an NDA Tier 1 contractor for five sites its current focus is decommissioning and environmental restoration. Over the last 10 years UKAEA has been the fore-runner of the NDA strategy of out sourcing decommissioning activities at its sites. Consequently whilst there are around 400 people at the Windscale site only about 100 are UKAEA employees. At Culham in Oxfordshire UKAEA also operates the UK’s nuclear fusion research programme. Currently, there are 2,000 employees across six UK sites (including two in the Northwest) and the annual turnover is £416 m (2003/4).

Following a strategic review with government, UKAEA announced in April 2005 that it would follow a growth strategy seeking new business in the UK and overseas focussing on;

• NDA site management contracts;

• Consultancy and engineering design services in decommissioning, waste and fuel management and site restoration

• Project and programme management services

2.5.4 British Energy

British Energy is a commercial power company that operates the more modern AGR reactors and the Sizewell ‘B’ PWR reactor. In total, it is responsible for the operation of 8 reactors including Heysham ‘1’ and Heysham ‘2’, which have combined capacity of 2500 MW. Throughout the UK, British Energy employs 5,200 people around 1,000 of which are based at Heysham.


3. THE NUCLEAR INDUSTRY IN THE NORTHWEST

In total, the nuclear sector supports an estimated 23,000 jobs in the region accounting for about 1.5% of total Northwest employment and the six licensed sites under the control of the NDA (which does not include Heysham) generate a combined expenditure of around £1 billion pa. The key players in the nuclear sector BNFL, NDA and UKAEA have significant operations in the Northwest distributed across the region. (Ref Fig. 1 and Table 1)

UKAEA Windscale

SellafieldBNFL Calder Hall

Drigg

BNFL Barrow

BE Heysham

BNFL Springfields

HSE/NII Bootle

UKAEA RisleyBNFL RisleyNNC Risley

NNC Knutsford

URENCO Capenhurst

BNFL Daresbury

NDA

UKAEA Windscale

SellafieldBNFL Calder Hall

Drigg

BNFL Barrow

BE Heysham

BNFL Springfields

HSE/NII Bootle

UKAEA RisleyBNFL RisleyNNC Risley

NNC Knutsford

URENCO Capenhurst

BNFL Daresbury

NDA

Environment Agency

Figure 1 Principal Sites in the Northwest Nuclear Sector

Table 1: BNFL Operations in Northwest England Site Status Employment

Sellafield, Cumbria (BNG and Nexia Solutions)

Fuel reprocessing, decommissioning & waste management. R&D. 8,000*

Springfields (Westinghouse & Nexia Solutions)

Fuel manufacture, provision of services & decommissioning. R&D. 1,400

Drigg, Cumbria (BNG) Low level waste management 150Calder Hall, Cumbria (BNG) De-fuelling & decommissioning 500Daresbury (BNFL Corporate HQ) Corporate HQ 150Risley (BNG & Nexia Solutions) Management,project engineering, R&D. 2,000Capenhurst (BNFL) Decommissioning & waste management 200Capenhurst (Urenco) Uranium enrichment 300

*Total employment at the Sellafield site including sub-contractors is just over 10,0008

8 Sellafield Near Term Work Plan http://www.sellafield.com/ntwp.php?pageID=74


In addition to the above there are also smaller operations based at Barrow and Carlisle.

Other major employers in the Northwest are:

• UKAEA, the Tier 1 contactor for Windscale where there are around 400 employees and contractors, together with a smaller office in Warrington.

• NDA headquarters are located in West Cumbria with around 100 employees and a regional office in Warrington.

• The Health and Safety Executive’s Nuclear Safety Directorate, is based in the Northwest, employing around 400 people at its offices in Bootle on Merseyside and the Environment Agency’s nuclear related activities are based at their Penrith office.

• Corus Process Engineering employs about 125 staff in West Cumbria and is one of the world’s leading designers and suppliers of flasks for the transport of nuclear materials.

• Inbis is one of the UK’s largest engineering design consultancies specialising in project management, remote handling technologies and systems integration. About 300 staff are located at their offices in Preston.

• With offices in Warrington, Knutsford in Cheshire and Westlakes in Cumbria, the AMEC subsidiary NNC employs over 1,000 staff in the Northwest engaged in engineering design, project management and safety assessment.

• NIS has over 200 staff located in Chorley supplying process plant and equipment. There are also operations at the non-active rig hall facility in Workington, which is operated in partnership with Nexia Solutions.

The NWDA and WLR have recently commissioned ERM to map the Northwest companies involved with the decommissioning supply chain and this study has identified around 300 companies in the region. The distribution of these companies across the region is shown in Figure 2, which shows significant clusters of activity in West Cumbria and the Manchester/Warrington belt. The nuclear sector is particularly important to West Cumbria where it accounts for around 25% of the local employment with the biggest concentration of 12,000 people employed at Sellafield. In addition there are a large number of small (Tier 3) companies in the West Cumbria area who are almost entirely dependent upon the nuclear sector.

It is also noteworthy that the BAE Systems shipyard at Barrow in Furness is a licensed nuclear site employing around 3,000 people. This yard concentrates on submarine construction (there are currently three boats under construction). In terms of nuclear engineering capability this is the only site in the UK where reactor construction is undertaken. Although there are major differences between propulsion and power generation reactors there is a core capability of 90-100 people involved in reactor design and a further 100 employed as nuclear qualified welders, pipe fitters, commissioning and installation experts.


Tier 3

Tier 2

Tier 1

Figure 2: Distribution of Companies involved in Decommissioning

Around half the Tier 2 and 3 companies are classified (according to SIC Codes) as with ‘Architectural and Engineering Activities and Consultancy’ and ‘Manufacturing’ with the remainder from a diversity of classifications such as ‘Wholesale and Retail’; ‘Construction’ and ‘Legal’, ‘Accounting’ and ‘Management Consultancy’.

The UK’s civil nuclear research facilities are centred on the Sellafield Technology Centre (STC), which operated by Nexia Solutions on behalf of the NDA (with other facilities at Springfields and Risley). Research alliances have been formed between Nexia and selected University departments at Manchester, Sheffield and Leeds. Currently there are 120 researchers engaged on projects supported by these research alliances. About half of the researchers are based at Manchester and the University has recently established the Dalton Nuclear Research Institute to develop a programme of post-graduate level nuclear education and training (Ref Section 5.4).

Lancaster University now offer a masters course in nuclear decommissioning and the Westlakes Research Institute in West Cumbria, which is part of UCLAN has an international reputation for epidemiology with important applications for the nuclear sector.


4. DRIVERS FOR CHANGE

4.1 Decommissioning

Pending decisions on future energy policy and the options on long-term waste management the short to medium term focus of the existing sector will be decommissioning. The NDA is now responsible for decommissioning the 20 publicly owned civil nuclear sites in the UK which includes Sellafield, the LLW site at Drigg low level waste disposal facility, the Magnox nuclear power stations and the UKAEA sites (Windscale, Winfrith, Harwell, Dounreay and Culham). Six of these sites are located in the Northwest;

• Calder Hall, Cumbria – decommissioning of the World’s first nuclear power station, which ceased operation in 2003.

• Capenhurst, Cheshire – former uranium enrichment operation currently being decommissioned (Note; Urenco has ongoing enrichment activity at Capenhurst).

• Drigg, Cumbria - low level waste repository expected to be operational until 2020s.

• Sellafield – large complex site with fuel reprocessing and fabrication operations. Also storage of radioactive materials. Various parts of the plant are operational or in the process of being decommissioned.

• Springfields, Lancashire - fuel assembly manufacture. Some decommissioning but parts of the plant expected to be operational until 2020s.

• Windscale, Cumbria – a number of reactors being decommissioned.

The NDA is committed to openness and transparency and the long-term plans for each site have been published in the form of Life Cycle Baselines (LCBLs), which describe the decommissioning process to 2150. The estimated liabilities for decommissioning (and operation) of these sites total £63 billion and are summarised in Table 2.


Table 2 Estimated Site Life Cycle Costs (£m)9

Site

Calder Hall 1,074 - 1,074 - 1,074 Capenhurst 563 - 563 148 415 Drigg 1,054 - 1,054 591 462 Sellafield 29,535 10,450 39,985 9,657 30,327 Springfields 445 2,375 2,821 2,445 375 Windscale 694 - 694 39 655 Total NW sites 33,365 12,825 46,189 12,880 33,309 Total UK sites 48,496 14,218 62,714 14,334 48,380

Net CostsDecom & Clean Up Operations Total Revenue and

Other Income

Therefore, approximately 70% of the anticipated UK decommissioning spend will be at Northwest sites, predominantly at Sellafield. The spend profile over the period is not uniform with generally high spend in the early years which then tails off as sites are fully decommissioned and remediated. For example the combined spend for the Sellafield, the LLW Drigg and Calder Hall sites is currently around £1 billion/year and will continue at this level until around 2015, when it begins to fall sharply to around £200 million/year by 2035 and declining to almost zero by 2100 as decommissioning is completed.

More detailed short-term plans for the sites are contained in the Near Term Work Plans (NTWPs), which cover a three-year horizon; in turn the NTWPs are the basis for the annual procurement plans. The NDA annual plan for 2005/6 anticipates a spend of £2110 million with 60% to be spent in the Northwest (Ref. Table 3).

Table 3: NDA Annual Plan 2005/6

Site

Calder Hall 22.5 0 22.5Capenhurst 25.4 0 25.4Drigg 17.4 0 17.4Sellafield 290.5 727.4 1017.9Springfields 3.9 150.5 154.4Windscale 25.6 0.9 26.6Total NW sites 385.3 878.8 1264.2Total UK sites 967.9 1142.2 2109.9

Decommissioning (£M) Operations (£M) Total (£M)

A detailed analysis of the NTWPs shows that the average annual spend in the region will be around £1.2 billion but this reduces by about 8% over the NTWP period 2005-08. The patterns of spending will also change as new procurement strategies are introduced placing more emphasis on contracting out of services and Tier 1 contractors will probably reduce their own direct labour forces and contract out more of the work. Therefore, despite the overall decline in expenditure of 8% over the period 2005-08 there may be increased opportunities for the Tier 2 and 3 as the supply chain spend is anticipated to rise from £537 million to £704 million over the period 2005 -08. 9 NDA Strategy April 2006 www.nda.gov.uk


4.2 Waste management

Government is currently formulating the UK’s policy on the long-term management and disposal of all types of radioactive waste. The Committee on Radioactive Waste Management (CoRWM) was established in 2001 to review the options for managing the UK's radioactive waste and recommend a preferred option, (or combination of options) which provide a long-term solution. The NDA programme increases the priority attached to developing a long-term solution for managing high, low and intermediate level wastes. Almost all of this is already located, and will continue to be produced, at Sellafield. CoRWM is due to make its recommendations on high and intermediate level wastes by July 2006, alongside the LLW policy framework from DEFRA.

Whatever the option recommended by CoRWM, as the NDA programme gets underway there will be an upturn in waste packaging activity, driven by criteria laid down by Nirex. There will also be a surge in activity around the design and development of disposal concepts and the selection and permitting of a site for whatever disposal facility is chosen. An upturn in research would also be expected in order to underpin the chosen option.

Advanced repository designs have been produced in Europe and the US and work on a UK repository would by no means have to start from scratch but there would be a requirement for site specific R&D. Future development of the UK’s chosen solution is likely to feature the involvement of Nirex and collaboration with other European organisations.

At the same time, the search may begin for an HLW repository, running in tandem with site selection for ILW. Wherever is chosen, support work will intensify on the drawing board, in the laboratory and in the field as concepts crystallise into designs. With significant progress in repository design being made in other European countries such as Sweden, Switzerland and Finland, renewed activity in the UK may well stimulate greater collaboration in jointly funded research. Academic institutions, through their relationship with the Research Councils, will have an important role to play here, as will access to properly equipped research facilities.

As plans for HLW and ILW facilities develop, attention will turn in the medium to long term towards implementation. Waste packaging technology will already have developed as an important leg of the nuclear decommissioning supply chain, close to the source of wastes at Sellafield. A new supply base will begin to develop around facility construction, operation and monitoring. Activity here could well be site- specific, depending on where the facilities are eventually located, but connectivity with the centres of waste packaging and research, design and technology support will be crucial.

Whatever the ultimate direction of waste management policy, a sustainable solution for the long term will require significant investment in both facilities and supporting expertise and skills. If the UK is to be able to respond to this requirement through domestic firms and academia then a significant level of research and commercialisation of research advances will be required. This could present a considerable export opportunity for UK companies.

The unresolved questions surrounding waste management are also impacting on the MOD’s plans for the decommissioning and disposal of laid up nuclear submarines. Over the next 30 years it is anticipated that 27 nuclear submarines will be retired from service, there are currently 11 submarines held in interim storage at Rosyth and Devonport under the MOD’s ISOLUS (Interim Storage of Laid up Submarines) programme. These vessels will remain in storage until there is a solution to the storage of the ILW that their decommissioning will generate.


4.3 Future Energy Policy

The 2003 Energy White10 paper stated the government’s long-term goal of putting the UK on a path of reducing CO2 emissions by 60% by 2050 (based upon 1990 emission levels). In the short term, UK is committed to achieving a 12.5% reduction in greenhouse gas emissions by 2012 under the Kyoto Protocol11. Progress over the period 1990-2000 towards achieving this goal was good, however data from 2003 and 2004 showed slight increases in emissions. This early progress is mainly attributed to the switch from coal to gas by power generators in the 1990s and the decline of much of the UK’s heavy manufacturing industry. Although, the UK will probably meet its Kyoto commitments it is not clear how further progress will be achieved.

The White Paper predicted that increasing levels of energy efficiency and widespread deployment of carbon free renewable energy generation would achieve further improvements. Financial incentives and grants were introduced to support renewable electricity generation capacity and a target was set that 10% of UK electricity supply should be from renewable sources by 2010. However, progress has been slow with many of the proposed wind farm developments stalled by planning issues, environmental objections and the MOD. These levels of penetration will not compensate for the loss of (carbon free) nuclear generation and coal fired plants that are nearing the end of their life.

Nuclear power is an important component of UK electricity generation and currently supplies around 21% of the UK’s electricity, with renewables contributing 3.5% (Figure 3). The majority of the current nuclear this capacity is derived from the British Energy plants (seven AGR plants and Sizewell B) with the four operational Magnox plants accounting for the balance12. However, this current capacity of 11,194 MW is expected to decline sharply over the next few years and fall to 2,834 MW by 2014 as stations reach the end of their operational lives.

Hydro 0.5%

Other renewables3.5%

Nuclear21.3% Coal

36.7%

Gas 34.1%

Oil 1.3%

Other fuels/Net imports

2.6%

Figure 3: 2004 UK Electricity Production by Fuel Type13

10 Our energy future – creating a low carbon economy, DTI, 2003

11 The Kyoto Protocol covers a basket of six greenhouse gases, based on their ‘global warming potential’ and volume of emission, carbon dioxide (CO2) is the most important accounting for over 80% of greenhouse gas emissions.

12 http://www.dti.gov.uk/energy/nuclear/technology/history.shtml

13 Digest of UK Energy Statistics, DTI, 2004 http://www.dti.gov.uk/energy/inform/energy_stats/electricity/dukes05_5_4.xls


Without new nuclear build, the most likely scenario is that the loss of coal fired and nuclear generating capacity will be made up by gas-fired generation, which also raises security of supply issues with the decline of UK gas fields and the increasing reliance on imported gas. Projections about the future energy mix vary but a possible scenario is that by 2020 around 70% of UK generation capacity could be gas fired with around 80% of the gas imported.

Clearly nuclear generation would address the requirement of large-scale carbon free power generation and would provide security of supply. However, there is no universal agreement on the costs of new nuclear capacity and nuclear power remains an emotive issue with the general public.

A comprehensive review of UK energy policy was launched in January 2006, which is due to be completed within 12 months. Given the somewhat disappointing progress on reducing greenhouse emissions through the deployment of renewable technologies the position of new nuclear capacity is the key question for the review. A positive decision concerning new nuclear build would have a major impact on the sector with an estimated capital cost of around £1million/MW, a fleet of 10 reactors with a combined total capacity of 10,000 MW would require a capital investment of £10 billion. The operation of a new reactor fleet may also open up new opportunities for fuel fabrication, reprocessing and waste management facilities located in the Northwest.

4.4 Other Drivers

Fusion Programme

The International Thermonuclear Experimental Reactor (ITER) programme recently announced that the experimental fusion reactor would be constructed at Cadarache, near Aix-en-Provence, France. This is an international project to construct a 500 MW experimental fusion reactor and will be jointly funded by China, the EU, Switzerland, Japan, Korea, Russia and the USA.

Design will begin in 2006 and construction is expected to be completed by 2016 at a cost of $4.5 billion. In parallel, an International Fusion Materials Irradiation Facility (IFMIF) is also planned which is the materials test facility for ITER components and materials. To establish IFMIF is expected to cost an additional $1 billion.

Defence Policy

There are currently three Astute Class nuclear powered submarines under construction at the BAE Systems Barrow shipyard. An order for an additional vessel is expected in 2006; however, there is no forward visibility of future orders or indications of when a design will be commissioned to replace the Astute Class. This lack of continuity is a major threat to the design teams and nuclear engineering expertise at Barrow.


5. IMPACTS

5.1 Employment

In the long term the decommissioning programme will inevitably result in job losses. Employment at the Sellafield, Calder Hall, LLW site at Drigg and Windscale sites is currently around 12,000 people and is likely to remain at these levels until around 2015, when it will decline to around 4,000 by 203514 (Ref. Figure 3). In terms of nuclear power generation at Heysham, employment is likely to remain stable during its operational life but falling when the two reactors reach the end of their lives and are decommissioned.

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Figure 3: Lifetime Resource Profile for West Cumbria Sites

These levels of job losses could have a severe socio-economic impact bearing in mind that approximately one in four jobs in the locality are related to the Sellafield site15. Even though there are no dramatic changes to the total numbers employed in the short term there will be changes to the patterns of employment as the Tier 1 contractors will reduce their own direct labour and increase their levels of sub contracting.

Latest employment data (2003) shows that West Cumbria remains dependent on a narrow range of industrial sectors and particular firms and many studies have demonstrated the high dependency on the nuclear sector16. In the longer term there is a pressing need to diversify the economy and reduce the dependency on the nuclear sector to mitigate the impacts of the predicted 8,000 (relatively well paid and mainly high skilled) jobs losses at Sellafield.

The other sites will also be affected e.g. the fuel manufacturing operations at Springfields as the UK’s nuclear stations come off line and no longer require fuel. Although the numbers of jobs involved are far fewer compared to West Cumbria there could be a significant localised

14 BNFL 2004 Life Cycle Base Line http://www.sellafield.com/lcbl.php?pageID=21

15 West Cumbria: Socio-economic Study –2003 Update, The Environment Council: BNFL National Stakeholder Dialogue 16 An Economic Assessment of Cumbria 2004, Cumbria Economic Intelligence Partnership, June 2004


http://www.sellafield.com/lcbl.php?pageID=21

impact around Springfields as employment is predicted to fall from 1800 to around 800 over the next 5 years.

For the longer term the impacts of the closure and decommissioning of the Heysham reactors must be considered with Heysham 1 reactor scheduled to close in 2014 and Heysham 2 in 2023 which will eventually result in the loss of around 1000 jobs

5.2 The Decommissioning Supply Chain

The NDA’s programme would appear to offer increasing opportunities to the Tier 2 and Tier 3 companies in the supply chain with an increasing emphasis on contracted out services and a more open competitive environment. However, such opportunities will be balanced by a number of threats:

• BNG have adopted EU procurement rules as of April 2005 and these will be cascaded down the supply chain. This greater transparency will increase interest in the decommissioning market and potentially increase the competition for contracts. This will ease the market entry for foreign competition that view the decommissioning programme as a major opportunity to establish themselves in the UK market, a number of US companies have already established themselves in West Cumbria. In particular, if in the future a foreign company successfully bids for a Tier 1 or Tier 2 contract this may well introduce their own associated supply chain to the UK market.

• If supply chains are to be effectively managed then there will have to be some rationalisation. BNG currently have several thousand suppliers and both BNG and UKAEA have strategies in place to reduce their supply base. The end result will be that Tier 3 companies will no longer directly contract with BNG or UKAEA and will have to develop new relationships with Tier 2 contractors. For smaller Tier 3 companies this could mean developing new skills in consortium bidding, customer relationship management and market intelligence.

• The adoption of EU procurement rules by BNG will entail some changes to the bidding process with an increasing emphasis on e-tendering and for many SMEs this could represent a considerable challenge.

5.3 Skills

There will be a major long-term decline in overall employment at UK nuclear sites over the next 30 years as they progressively move from operation to decommissioning and remediation. However, in the short and medium term significant business opportunities for UK firms will exist balanced against the increasing competition as the market is opened to competition. Foreign, particularly US companies are both potential competitors and partners.

UK firms will need to adapt their approach to business development and acquire new management and technical skills in response to these changes. There will also be significant new skills requirements for operators working at the nuclear sites as they move away from operations towards decommissioning.

The DTI sponsored Nuclear and Radiological Skills Study in 2002 predicted acute skills shortages at all levels17 within the nuclear sector, in particular a need to recruit around 17 Nuclear and Radiological Skills Study, DTI 2002 /www.dti.gov.uk/energy/nuclear/skills/full_report.pdf


10,000 professional staff (with a first degree or above) between 2002 and 2012 was identified as a major challenge. More recent work by Tribal, COGENT and the Nuclear Skills Advisory Group has refined these figures, showing particular requirements for project managers/planners and specific specialist skills (e.g. safety, instrumentation and systems). The pressure on the more general project management skills will is likely to intensify as other large civil projects (e.g. the 2012 Olympics) compete for qualified and experienced personnel.

Implementing both a long term policy for waste will also require significant skills both from the existing and future workforce. Were the UK to commence a new build programme, then achieving value for money, and developing licensing and regulatory approaches, as well as site operation will require the UK to retain and develop a skill set that will otherwise be lost as decommissioning of existing sites gathers pace.

5.4 Research and Technology

Research skills and programmes are ultimately fundamental to the success of the UK’s nuclear sector and retaining UK future influence.

Nuclear fission related research has steadily declined in the UK over the past two decades. Since the 1980’s, UK public investment in nuclear fission research has dropped by more than 95% and in industry the R&D skill base has shrunk by more than 90%. Other countries have faced a similar skills problem, but many are now taking coordinated action. Countries like Japan, France, Finland and the USA are now investing heavily. The US has reinvigorated its nuclear research programmes through the NERI and Nuclear Power 2010 initiatives. The US university budget for research on nuclear science and engineering has now been increased by £240m. The French government has also recently pledged to contribute over £600m per year to the CEA’s civilian R&D programme. The Pacific Rim countries are also investing significantly in nuclear R&D and skills recognising their importance over the longer term.

The UK is also unique amongst nations with significant nuclear capacity in failing to maintain any form of government sponsored laboratory engaged in fuel cycle or reactor design. France has the CEA, there is the JAEA in Japan, DoE labs in the USA and the Paul Scherrer Institute in Switzerland.

Dispersal and a reduction in the overall levels of fission research in the UK over the last 10 years have created a number of areas of concern:

• Fragmentation and disappearance of expertise from Industry

• Capacity and capability and sustainability of the UK’s skills pipeline with a number of key research disciplines showing signs of a shortage developing

• No authoritative independent source of Nuclear SET advice for government to help inform policy, carry out Departmental research and respond to questions

• Reduced capacity for international influence in a technology which has Global strategic importance


• No overall UK roadmap for nuclear R&D linking together current reactor operations, clean-up and decommissioning, “keeping the nuclear option open” (KNOO), defence, fusion and medicine.

• Uncoordinated UK public investment in nuclear R&D and related studies.

However, the UK still has leading expertise across both the academic sector and with the world class facilities at the Sellafield Technology Centre. The newly formed Dalton Institute at Manchester University aims to provide a world-class teaching and research centre for nuclear science in the Northwest.


6. A STRATEGIC APPRAOCH

6.1 Introduction

The UK nuclear industry is in a period of significant uncertainty, as the full implications of decommissioning emerge and with clarity on future waste management policy not yet established. In addition there is increasing debate around the future direction of energy policy.

In conjunction with its regional partners18, the NWDA has developed this strategy to set out how the region will support the various elements of its nuclear sector through this period of uncertainty and to help the industry develop its capacity to maximise opportunities in the future. It is prepared in the context of the Regional Economic Strategy, which recognises the continuing importance of the sector to the region and that it is internationally competitive.19

The strategic vision for the region needs to focus attention on the nuclear industry’s core dependence on technology and, at the same time, stress the importance of the industry winning widespread support through a positive track record. Whilst there is a tradition of strong local support in the region, the nuclear industry’s decline generally in the UK and elsewhere can be attributed to the general perception that it is unattractive economically and politically. The region should work towards a vision that tackles this by linking future growth with successful management of the historical legacy.

Partners agree that their work should drive forward achieving the following vision for the industry:

A world-class region of excellence in nuclear technology through demonstrable achievement in decommissioning, radioactive waste management, nuclear energy generation and research and development.

To achieve this vision the sector needs to adapt now to the changes arising from decommissioning, whilst ensuring that it is developing the skills, and investing in the research, necessary to be able to take advantage of future developments.

The actions we need to take have been identified under six strategic themes.



3. Supporting supply chains



18 A list and description of regional partners can be found in Annex 1

19 http://www.nwda.co.uk/RelatedContent.aspx?area=100



These themes have been developed taking into account the current industry outlook, a review of available evidence, the views of a range of stakeholder groups and lessons learned from projects already underway.

The NWDA’s role will vary: in some cases it will be the lead player, acting directly; in others (e.g. in respect of major infrastructure) its role will be as a catalysis, lobbying and ensuring the economic and social case for proposed action is clearly understood. Most of the priority actions rely on partnerships; alliances and stewardship of key relationships are common themes.

While some of the actions will have medium to long-term impact, action should begin now so that Northwest firms and skilled people are able to position themselves to capture the benefits. A ‘wait and see’ approach would risk losing the region’s competitive advantage.

Given the levels of uncertainty, and timescales for the development of a firm policy on waste disposal and management by government, these actions and the strategic approach will be subject to regular review. Compared to other regions of the UK, the Northwest has the largest concentration of nuclear related businesses. Commercial interest in the NDA decommissioning programme dominates the industry at present and supply chain mapping work carried out by ERM shows that although companies are distributed throughout the region much of the economic activity it generates is in West Cumbria.

6.2. Six strategic themes

The sections following outline the significance of and rationale for each of these sets of actions, and NWDA’s role in relation to them.

6.2.1 Strategic Relationships

The future of the industry will be driven by central government and the region needs to be engaged with central government in policy development and the decommissioning process. The key government organisations are:

• DTI – future of energy policy and lead government department for Regional Development Agencies, UKAEA, BNG/ BNFL and the co-owner of NIREX.

• NDA – decommissioning and associated supply chain, research, skills development and socio-economic impacts.

• DEFRA- waste management and co-owner of NIREX.

• MOD – nuclear powered submarines

• Office of Science and Technology/Research Councils – research funding

• HEFCE – funding for HEIs

The importance of West Cumbria has already been highlighted and the West Cumbria Strategic Forum (WCSF) is a direct link to government to facilitate action relating the socio-economic issues around the future of the industry. The NWDA has a key role in the WCSF


and also has direct relationships with officials and Ministers, both directly and with the Government Office for the North West.

The NWDA has established an effective relationship with the NDA. Joint working will ensure that NWDA actions support the NDA's future requirements and strategy and that the NDA's socio-economic plans are aligned with the Regional Economic Strategy. NWDA will also seek to build relationships with potential Tier 1 contractors in support of the government’s requirements of a level playing field for all.

In the context of building and maintaining strategic relationships, we will:

• Action 1.1 -Ensure a strong Northwest input into the Energy Review highlighting the regional nuclear expertise (NWDA lead).

• Action 1.2 Maintain effective dialogue with NDA and DTI (NWDA lead)

• Action 1.3 Will map out and manage relationships with key industry organisations and individuals, working where appropriate through NDA with companies new to the sector in the UK (WLR/NWDA lead).

• Action 1.4 Develop the region’s relationship with MOD (Furness Enterprise lead)

• Action 1.5 Develop the region’s relationship with Nirex (NWDA lead)

• Action 1.6 Identify potential for relationships with firms likely to be involved in constructing waste management facilities (NWDA lead).

• Action 1.7 Further develop relationship with key regulatory bodies such as the NII and Environment Agency (NWDA lead).

6.2.2 Attracting Investment

The Northwest has been successful in establishing the NDA headquarters in West Cumbria. For the Northwest, and West Cumbria in particular, to become a successful centre for decommissioning expertise then the region must continue to support firms considering entering the market and the region.

As government policy on waste management becomes clearer then building on the concentration of existing waste expertise at Sellafield and establishing the region as a centre for waste management design and development will present further opportunities. Design and site selection work for an ILW facility will involve expenditure in the order of £3 billion with a further £4 billion expected to be spent on construction, operations and closure. Regardless of the location of any facility, the region will work to ensure that funding for the research, design and development phase is spent in the Northwest.

We will also seek to ensure that spending on research, design and development of HLW and ISOLUS facilities are also spent in the region, irrespective of where the facilities might eventually be built.

In the longer term as employment in the sector declines there will be a need to attract new businesses to the region to provide alternative opportunities; this will be a particular issue in West Cumbria. Many of those leaving the sector will be highly skilled and where possible


priority will be given to attracting high value added businesses that can best utilise this pool of talent.

In order to attract new investments, we will:

• Action 2.1 Work with the NDA to ensure that their socio-economic investments are consistent with regional and sub-regional priorities (NWDA/NDA lead).

• Action 2.2 Encourage and support potential decommissioning contractors to establish a presence in the region. (WLR/CIIA lead).

• Action 2.3 Explore how the Northwest might best position itself to take advantage of decisions concerning future in radioactive waste management and possible new UK build programmes (NWDA lead).

• Action 2.4 In the longer term, focus support for inward investment and domestic relocation in areas of the region that will be most affected by the decline of the sector as decommissioning progresses. (WLR/CIIA lead).

• Action 2.5 Seek central government approval for the National Nuclear Laboratory as a channel for all UK publicly funded fission research, and assist Nexia Solutions, Manchester (Dalton Institute) and Lancaster to attract funding for research based at the NDA Sellafield Technology Centre and Barrow (Nexia Solutions/Dalton/NDA lead).

• Action 2.6 Investigate ways of attracting spin-off projects from ITER (UKTI lead).

• Action 2.7 Investigate potential for stimulating hybrid energy futures projects (such as nuclear generated hydrogen) through the Northern Way initiative (NWDA lead).

6.2.3 Skills and Research

With the current emphasis on decommissioning the sector’s skills requirements will change across all levels as sites move away from operational activity. In common with all engineering based sectors, the industry is also affected by an ageing workforce, declining levels of science graduates and reluctance on the part of these graduates to join an industry that is perceived to be in decline. Skills provision needs to be continually reviewed and assessed to develop an accurate assessment of the future requirements.

In relation to supporting development of skills and research in the region, we will;

• Action 3.1 Support the establishment of a National Nuclear Skills Academy, together with new facilities in West Cumbria (Nucleus) building upon existing training provision such as GENII to enhance skills training provision up to NVQ Level 3, and possibly foundation degree level (Cogent/NDA lead).

• Action 3.2 Through the review of Higher Education in Cumbria, work with HEFCE and the region’s HE institutions to develop the higher level skills that the region needs (HEFCE lead).


• Action 3.3 Support the development and maintenance of post-graduate and 5-star research through the proposed National Nuclear Laboratory and the Dalton Institute Cumbria facility (Nexia Solutions/University of Manchester/NDA lead);

• Action 3.4 Support the development of Westlakes Research Institute, with its focus on epidemiology (WLR lead).

• Action 3.5 Through the Regional Skills Partnership ensure that the skills requirements of the nuclear industry continue to be recognised in LSC investment planning (NWDA lead).

6.2.4 Supporting supply chains

Changes in procurement practices and future changes to the structure of the supply chain have introduced significant uncertainty into the Northwest nuclear supply chain. At the same time, it is clear that the supply chain is going to have to adapt to a more competitive environment and to develop new relationships with different Tier 1 and 2 contractors in the future. Finding and developing relationships with a small number of important target customers will be particularly important for firms entering new markets or engaging with new Tier 1 or 2 contractors. Experience from other sectors that have faced similar challenges to those now faced by the region’s nuclear industry is that companies that develop key client management skills are those that flourish.

Decommissioning will create a gradually declining market and the supply chain should be supported in its efforts to diversify into new geographical markets over the next 20 years; there may also be opportunities to utilise the skills acquired in decommissioning in other sectors.

Were energy policy to change in the future and a new build programme be developed it cannot be assumed that UK suppliers will be necessarily successful in winning orders. Modern 3rd generation technology is supplied by vendors operating in a global market. Evaluation of new-build capability in the region’s nuclear industry is therefore an early priority.

Support in this area will build upon existing business support activities (e.g. Business Link, DDA) to develop a tailored programme of support for the decommissioning supply chain. In order to support supply chains, we will;

• Action 4.1 Maintain a database of the organisations active in the decommissioning supply chain (WLR lead).

• Action 4.2 Ensure wide access, especially in West Cumbria, to both generic and nuclear-specific business support services, integrated with advice on skills development (WLR lead).

• Action 4.3 Encourage cooperation and alignment of firms with Tier 1 contractors to reflect reshaping of NDA supply chain, including providing support for key client management skills (CWEA/WLR lead).

• Action 4.4 Enhance the level of intelligence and assistance available to firms in investigating and developing export opportunities. Fostering the formation of consortia and alliances (within State Aid constraints) will be one element of this


assistance. A key aim will be to reduce the actual and perceived risks faced by firms aspiring to grow exports (UKTI lead).

• Action 4.5 Work to encourage innovation and diversification within existing suppliers (NWDA lead).

• Action 4.6 Map the capabilities of Northwest organisations and the opportunities that would be presented by a new nuclear build programme (NWDA lead).

• Action 4.7 Map the capabilities of Northwest organisations in relation to waste management (NWDA lead).

• Action 4.8 Now that there is certainty surrounding the location of the ITER programme, support for Northwest companies in bidding for work related to ITER (NWDA/UKTI lead).

The supply chain is geographically well distributed throughout the region and will include both established firms and new entrant companies. Broad supply chain support will therefore be provided throughout the region but with an initial focus on West Cumbria and be based on the needs of all parts of the sector.

6.2.5 Enterprise and Innovation

The potential socio-economic impact of the declining employment in the sector needs to be addressed. This will be particularly acute in West Cumbria where there will be a strong need to develop alternative employment opportunities. Many of the individuals leaving the industry will be highly skilled and entrepreneurship should be encouraged through appropriate business support/advice and providing access to start up capital.

Increasing competition within the industry means that innovation and enterprise will become increasingly important. Companies will also need to develop their capacity in new markets associated with remediation, waste management and disposal.

The nuclear industry has invested heavily over the years in knowledge capital and now needs help in finding ways of redeploying know-how through the creation and commercialisation of ideas. Diversification opportunities from the nuclear industry have been the study of considerable discussion – see for instance the recent Joint Fact Finding Study for BNFL20. NWDA should follow up such discussions with a view to helping businesses and individuals identify and assess opportunities, prioritise and select the most attractive ones, appraise and where necessary manage the associated risks (e.g. by forming partnerships and alliances), and put in place well thought-out business strategies to exploit the selected opportunities. Areas where know-how that has been developed in the nuclear industry and could be used elsewhere include process engineering, numerical modelling, remote inspection, safety-critical software and stakeholder engagement.

Effective business support structures, linked to appropriate actions across all levels of skills will be required to support an increase in the overall level of innovation and enterprise.

20 BNFL National Stakeholder Dialogue. Diversification Opportunities at BNFL and in the Local Economy: Joint Fact Finding Study. Environmental Resources Management, 2004


In the context of encouraging and supporting enterprise and innovation we will:

• Action 5.1 Promote nuclear industry cluster as innovative, high added value technology businesses (NWDA lead).

• Action 5.2 Provide a range of enterprise support activities such as specialist business advice and access to business start up finance (NWDA lead).

• Action 5.3 Engage with NDA, BNG and others with a view to ensuring that changes in procurement procedures favour rather than disadvantage SMEs, and do not discourage innovation (WLR lead).

• Action 5.4 Study and share best practice and develop relationships with other peripheral regions and sub-regions in enterprise support (WLR lead).

• Action 5.5 Support companies in their efforts to diversify into new markets, both nuclear and non nuclear (NWDA lead)

• Action 5.6 Support increased collaboration between Nexia Solutions operating the Technology Centre and other relevant organisations e.g. Dalton Centre, Centre for Process Innovation at Teeside and international nuclear institutes (Nexia Solutions/Dalton/NDA lead).

• Action 5.7 Support the business development opportunities associated with reactor design/commissioning skills at BAE Systems Barrow (Furness Enterprise Lead).

6.2 6 Influencing infrastructure

Road, rail and sea links have always been important for the movement of materials especially for fuel shipments to Sellafield. These will continue for years to come but volumes will diminish as commercial operations are wound down. In the future, these may give way to movements of conditioned radioactive waste away from Sellafield depending on the choice of disposal options and sites.

Maps of the nuclear industry show that it has no single centre of gravity with companies spread around the region. In the future, with expected industry transformations and consequent supply chain restructuring, companies will suffer if they are not able to move people, data, ideas and goods around quickly and efficiently. Communications between West Cumbria and the rest of the region (and the national infrastructure) will continue to be important.

Government has recently requested the Northwest (together with the other English regions) to identify regional transport priorities as part of future spending allocations. This exercise is being carried out by a group comprising NWRA, NWDA, GONW and WCSF, which will be taking into account the views and needs of the nuclear sector.

The specific action relating to infrastructure are therefore centred around maintaining a watching brief and influencing to the benefit of the sector where possible.


6.3 Implementation

The six identified strategic themes are designed to have an impact principally in the short to medium term. Sector development is currently being driven by decommissioning but waste management will become increasingly important in the near to medium term. An energy policy review, which is likely later in the year, could open up the industry on a new front if it were to signal a reactor replacement programme. This strategy is driven primarily by the decommissioning programme but will be reviewed and updated in light of developments in waste management and energy policy.

Tables 4 and 5 overleaf provide some further detail on the strategic actions highlighting the priority, timetable and responsible organisations.



Table 4: Implementation Plan for the Strategic Themes Pr ity Lead Body Partners

1.1 Input into the DTI Energy Review High NWDA WLR, CWEA, Furness Enterprise.1.2

Maintain dialogue with NDA and DTI) Medium NWDA WLR, CWEA, GONW1.3 Map and manage relationships Medium NWDA/WLR CWEA, NIA1.4 Develop relationships with MOD Medium Furness Ent. NWDA, WLR, CWEA1.5 Develop relationships with NIREX Medium NWDA WLR, CWEA, Furness Enterprise.1.6 Identify potential relationships re waste management Low NWDA WLR, CWEA,1.7 Develop relationship with regulators (HSE, EA) Low NWDA WLR, CWEA,2.1 Ensure NDA socio-economic investments are consistent

with re

ior

gional priorities High

NWDA/NDA WLR, CWEA2.2 Inward investment for decommissioning contractors High CIIA, WLR NWDA2.3 Explore the potential benefits for the NW from a new nuclear

build and waste management solutions.Medium

NWDA WLR, CWEA,2.4 Attract inward investment in areas of need Medium

CIIA, WLR CIIA, WLR2.5 Attract research funding High Nexia, Dalton

Institute., WLRI NWDA2.6 Investigate benefits from ITER Medium UKTI NWDA, WLR, CWEA, UKAEA2.7 Hybrid futures (Northern Way) Low NWDA ONE-NE, Yorks Forward3.1 Establish National Nuclear Skills Academy High Cogent/NDA LSC, ERDF, NWDA, BE, GONW3.2 Develop HE provision in Cumbria High WLR HEFCE3.3 Support post graduate/research activity Medium Dalton Institute Nexia, NDA, WRI3.4 Support development of Westlakes Research Institute Medium UCLAN NDA, WLR3.5 Maintain the profile of nuclear skills Medium NWDA LSC, DfES, DTI, GONW4.1 Maintain a supply chain database High WLR/CWEA4.2 Provide specific nuclear related business support High WLR4.3 Building business and client management skills High NWDA4.4 Assistance with export markets Medium UKTI4.5 Support for innovation and diversification Medium NWDA4.6 Develop opportunities related to new build Medium WLR/CWEA4.7 Develop opportunities related to waste management Medium WLR/CWEA4.8 Develop opportunities related to ITER Medium NWDA/UKTI5.1 Promote the NW nuclear sector Medium NWDA WLR, CWEA5.2 Support for enterprise Medium WLR/BL CWEA, NWDA5.3 Ensure that procurement practices encourage innovation High NDA/BNG/

UKAEA/WLR NWDA, CWEA5.4 Investigate work in other regions Medium WLR CWEA, NWDA5.5 Support diversification opportunities Medium NWDA WLR, DDA, CWEA5.6 Support collaboration with Nexia Medium NWDA Nexia, WRI, Dalton5.7 Support BAE in diversification High Furness Ent. WLR, NWDA6.1 Watching brief Low NWDA GONW, WLR6.2 Influence where possible Low WCSF NWDA, GONW,WLR

Building strategic relationships

Attracting investments

Influencing infrastructure

1.

2.

Enterprise and Innovation

5.

3.

WLR, BL, DDA, NDA, NIA, ERDF, BNG, UKAEA, CWEA, UKTI, GONW, WCDA

Skills and research

6.

Supporting supply chains

4.

ActionsStrategic action

27


Table 6: Timetable for implementation for the Strategic Themes

Q1 Q2 Q3 Q4 Q1 Q2 Q31.1 Input into the DTI Energy Review High NWDA1.2 Maintain dialogue with NDA and DTI) Medium NWDA1.3 Map and manage relationships Medium NWDA/WLR1.4 Develop relationships with MOD Medium Furness Ent.1.5 Develop relationships with NIREX Medium NWDA1.6 Identify potential relationships re waste management Low NWDA1.7 Develop relationship with regulators (HSE, EA) Low NWDA2.1 NDA socio-economic investments High NWDA/NDA2.2 Inward investment for decommissioning contractors High CIIA, WLR2.3 Benfits of new build and waste man. Medium NWDA2.4 Attract inward investment in areas of need Medium CIIA, WLR2.5 Attract research funding High Institute., WLRI2.6 Investigate benefits from ITER Medium UKTI2.7 Hybrid futures (Northern Way) Low NWDA 3.1 Establish National Nuclear Skills Academy High Cogent/NDA 3.2 Develop HE provision in Cumbria High WLR3.3 Support post graduate/research activity Medium Dalton Institute3.4 Support development of Westlakes Research Institute Medium UCLAN3.5 Maintain the profile of nuclear skills Medium NWDA4.1 Maintain a supply chain database High WLR/CWEA4.2 Provide specific nuclear related business support High WLR4.3 Building business and client management skills High NWDA4.4 Assistance with export markets Medium UKTI4.5 Support for innovation and diversification Medium NWDA4.6 Develop opportunities related to new build Medium WLR/CWEA4.7 Develop opportunities related to waste management Medium WLR/CWEA4.8 Develop opportunities related to ITER Medium NWDA/UKTI5.1 Promote the NW nuclear sector Medium NWDA5.2 Support for enterprise Medium WLR/BL5.3 Procurement practices High NDA/BNG/ 5.4 Investigate work in other regions Medium WLR5.5 Support diversification opportunities Medium NWDA5.6 Support collaboration with Nexia Medium NWDA5.7 Support BAE in diversification High Furness Ent.6.1 Watching brief Low NWDA6.2 Influence where possible Low WCSF

Lead BodyPriorityActionsStrategic action

Skills and research

6.

Supporting supply chains

4.

Building strategic relationships

Attracting investments

Influencing infrastructure

1.

2.

Enterprise and Innovation

5.

3.

2006 2007

28

7. CONCLUSIONS

The background research for this strategy has clearly identified the high concentration of nuclear related activity in the Northwest. In this respect the region is unique in that all aspects of the nuclear fuel cycle can be found together with most of the UK’s civil nuclear R&D capability. The sector supports around 20,000 jobs in the region, which is equivalent to 1.5% of total Northwest employment and is about half the UK total nuclear jobs. The sector is particularly important to the West Cumbrian economy where it supports around 1 in 4 jobs.

The sector has been characterised by a gradual decline over the past two decades. However, the formation of the NDA in April 2005 has provided some certainty over the UK’s decommissioning programme. Large sums of money will be spent in this area; the current spend is just over £2 billion per year of which 60% is spent in the Northwest. With opportunity there are challenges brought about by the NDA’s intention to increase competition and reduce decommissioning costs.

Although there is a clear pathway for decommissioning, uncertainty remains over new nuclear build and waste management. When CoRWM reports in 2006 the options for waste management will be clearer and could represent major opportunities for the Northwest in terms of potential business for construction and requirements for supporting R&D. Although energy policy will be reviewed in 2006, as yet there is no clear government signal concerning a timetable for decision over new nuclear build.

The BAE Systems shipyard in Barrow is a unique UK facility for the design and construction of nuclear powered submarines. Although the shipyard as a whole supports some 3,000 jobs, there is core of around 100 highly skilled engineers with expertise in nuclear reactor design. This capability is threatened by a lack of forward visibility of future MOD procurement for nuclear submarines.

This strategy identifies a number of key strategic actions to support the sector over the short to medium term with particular emphasis on;

• Business support for the nuclear decommissioning supply.

• Skills development.

• Nuclear science and technology

Other activities relating to attracting investment to the region, enterprise and innovation are also proposed. In many of these actions the NWDA will play a leading role but they will all be carried out in partnership with other regional bodies.

The NWDA will also support the sector by building key strategic relationships with the relevant government departments/agencies and the business sector. This is particularly important in ensuring that the Northwest has an early lead in relation to possible decisions surrounding a new nuclear build programme and a long-term solution to radioactive waste management.

These activities will help to build the vision of the Northwest becoming a world-class centre of excellence in nuclear technology


ANNEX 1 - Regional Partners

Business Link for Cumbria (BL)

www. businesslinkcumbria.co.uk

Business Link provides a variety of business support activities for SMEs. Business Link operates in all the sub regions of the Northwest.

www.cwea.org.uk CWEA is a public and private sector partnership working on a wide range of Economic Development issues throughout the Cheshire and Warrington area.

Cheshire and Warrington Economic Alliance (CWEA)

www.cogent-ssc.com

Cogent is the Sector Skill Council (SSC) covering the Oil and Gas Extraction, Chemicals Manufacturing, Petroleum and Nuclear Industries.

Cogent

www.cumbria-investment.co.uk

CIIA aim is to attract and support inward investments into Cumbria.

Cumbria Inward Investment Agency (CIIA)

www.nwda.co.uk Cumbria Vision is a partnership of the public sector support and regeneration agencies based in Cumbria and was established in order to ensure improved coordination.

Cumbria Vision

www.dda.gov.uk The DDA was established to promote technology transfer from defence related research to the civil sector.

Defence Diversification Agency (DDA) Furness Enterprise www.furnessenterprise.

co.ukFurness Enterprise provides business support services in the SW Cumbria Region.

www.gonw.gov.uk GONW is one of nine Government Offices in England, representing and undertaking work on behalf of ten central government departments.

Government Office for the North West (GONW)

www.nwra.gov.uk The NWRA is a representative body for the region with the aim of assessing the strategic needs of the region and scrutiny of the implementation of the Regional Economic Strategy

Northwest Regional Assembly (NWRA)

www.nwda.co.uk The NWDA is a non-departmental public body with responsibility for the sustainable economic development of the Northwest of England

Northwest Regional Development Agency (NWDA)

www.nda.gov.uk The NDA is a non-departmental public body, set up in April 2005 to undertake strategic responsibility for the UK’s civil nuclear legacy

Nuclear Decommissioning Authority (NDA)

www.niauk.org The NIA is the trade association for the British civil nuclear industry, representing over 100 companies.

Nuclear Industries Association (NIA) UK Trade and Investment (UKTI)

www.uktradeinvest.gov.uk

UKTI is the government organisation that supports UK exporters and overseas enterprises seeking to set up or expand in the UK.

www.wcda.co.uk WCDA aim is to regenerate the West Cumbria economy. West Cumbria Development Agency

WCSF is a high level body that was set up to address the issue of the economic impact of nuclear decommissioning and cleanup at Sellafield

West Cumbria Strategic Forum (WCSF)

Westlakes Renaissance (WLR)

www. westlakesrenaissance. co.uk

WLR is the Urban Regeneration Company for Furness and West Cumbria.

Westlakes Research Institute (WRI)

www.westlakes.org WRI delivers postgraduate and CPD programmes together with contract research and consulting. As of October 2006, WLRI became part of the University of Central Lancashire (UCLAN)


http://www.dda.gov.uk/

ANNEX 2 - GLOSSARY

AGR Advanced Gas Cooled Reactor

BL Business Link

BNG British Nuclear Group (formerly BNFL)

BNFL British Nuclear Fuels Ltd

CoRWM Committee on Radioactive Waste Management

CIIA Cumbria Inward Investment agency

CWEA Cheshire and Warrington Economic Alliance

DDA Defence Diversification Agency

HLW High Level Waste

ILW Intermediate Level Waste

ITER International Thermonuclear Experimental Reactor

LLW Low Level Waste

LSC Learning and Skills Council

NDA Nuclear Decommissioning Authority

NWDA North West Regional Development Agency

PWR Pressurised Water Reactor

UKAEA UK Atomic energy Authority

WLR West Lakes Renaissance

WRI Westlakes Research Institute


Document

Documents

nuclear sites

nuclear industry

glossary northwest nuclear

uk nuclear sector

nuclear power generation

nuclear sector employees

future nuclear waste

nuclear supply chain