My Lords, the Committee will be relieved to know that Amendment 40C is the lead amendment in the final group for today. This group
deals with aspects of the financial structure of the ONR. I am not sure that even the totality of 60 pages of regulations and another 60-odd pages of schedules makes this subject clear to me.
Amendment 40C is pretty straightforward. I cannot see in the reporting mechanism, although I am sure that this would be the fact in practice, that the report that the ONR has to give to the Secretary of State, and that the Secretary of State gives to Parliament, must include a fully audited set of accounts. That seems fairly straightforward. If it is there somewhere else in the Bill, I will withdraw, but it seems helpful to put it in the formal reporting structures.
Amendment 40D deals with borrowing. It is a probing amendment. I do not, in principle, object to the ONR being able to borrow, but it is not a provision that we find very frequently in the powers of regulators. We know that there has been some indication that the amount of public funding that the Government will give to the ONR—directly out of the taxpayers’ pocket, as it were—will be £35 million a year, I think, potentially rising to £80 million. It is a fairly hefty whack and a very important contribution.
The ability to borrow over and above that, and the ability to charge fees, is pretty unusual in a regulator. Can the Minister give us some indication of what she expects the total expenditure to be, not just the taxpayers’ and the fee income, but the total expenditure, roughly, of the ONR in its early years of operation? How much of that does she expect will need to be raised through borrowing? This is quite a delicate area. I am sure there are some public bodies that can borrow but, generally speaking, not regulators.
In the nuclear sector, speakers on previous amendments have emphasised the absolute necessity of the ONR being independent. There is a wider issue of conflict of interest over whom it would borrow from and what obligations that borrowing would provide. It is presumably not helpful if the ONR borrows from the industry it intends to regulate or anybody with connections to it. If we go ahead with an ability to borrow, there should be some pretty explicit restrictions on it. If the provision simply means that the ONR can borrow from the public works system of loans from the Government, we probably should say so. If it goes outside that, issues do arise.
This is not only an industry issue; security and safeguard issues are also involved. Would we want it to borrow from overseas sources? Probably not in most cases. In a subsequent clause we allow the ONR to operate overseas, but should it be able to borrow money to do so? Again, who will it borrow the money from to regulate or help regulate someone else’s nuclear sector? I am suspicious about this. My amendments would delete the lot but I am willing to listen to something short of that. Before we finish with the Bill, the Government need to be cautious about this and make explicit what powers we are giving it, what the limitations are and what the money is for.
On Amendment 40G, Clause 34 allows the ONR to charge fees. However, it is not clear on what basis those fees will be charged. In general, the Treasury would require regulators to charge fees based on full-cost
recovery. Is that the principle on which the ONR is to operate? It is not quite the principle on which the HSE operates, but it is moving towards it. It is, broadly speaking, the principle on which the Environment Agency operates and it would be useful to know on what basis it is to charge fees to the industry and to whom in the industry it is to charge fees. Is it simply the operators of the nuclear sites and installations, or is the whole of the supply chain feeding into that operation to be charged fees as well?
Clause 79 allows the ONR to provide services to anyone, more or less, provided it has the consent of the Secretary of State. Presumably that includes overseas. In principle, it may be okay to provide the expertise of ONR staff in areas for which the ONR is not responsible—which, as I read it, Clause 79(2) to (5) allows—but that seems a bit odd. If the expertise and services it is providing are not in the areas for which the ONR was set up, you could have all sorts of odd operations. A top nuclear inspector in his spare time may also be an expert in karate or in almost any area. On the basis of this clause, the ONR could hire out its services under the label of ONR. More likely, you could get the ONR running an engineering consultancy service, a scientific and technical service or a metric measuring service using its expertise, but not in the areas for which it is responsible.
If we are going to do that, we will be creating a somewhat different beast—a beast that can diversify. As we find with quasi-public bodies that diversify, if that side concern turns into a seriously commercial money-making concern, it can distort the priorities and the nature of the organisation as well as create areas for conflicts of interest.
I hope these wide and bland powers to provide services to almost anyone will be looked at again by the Government, and that clarification will be given, if not in legislation then at least in the guidance, on how the ONR board and management will eventually operate. I beg to move.