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Disaster waiting to happen

Transferring the whopping Sellafield clean-up contract over to privateers is not only a waste of money - it's dangerous, writes SOLOMON HUGHES

There is a £70 billion slow-motion nuclear disaster happening in Cumbria.

It has implications for both the growing nuclear programme and for government spending in general.

And a former Tory minister is cashing in on the mess. It should be front page news, but it rarely gets off the business pages.

I'm talking about Sellafield. The clean-up at the massive nuclear site is going badly wrong, wasting billions of pounds of taxpayers' cash.

Instead of cleaning up their act, the company with the big money contracts, called Nuclear Management Partners, hired a friend of David Cameron, former cabinet minister Lord Strathclyde.

Even though Nuclear Management Partners deserved to be booted out of Sellafield - and was threatened with the sack - it hung on to the deal.

Sellafield was the site of some early atomic reactors, and of an ill-fated reprocessing plant making nuclear fuel for foreign power stations.

The old reactors and the Mox reprocessing plant are now closed, leaving a huge job of work to clean up the irradiated complex. Some 10,000 staff are employed on Europe's largest nuclear site.

A consortium of three firms, Nuclear Management Partners was given a five-year contract to take over the clean-up in 2008. It is doing a very bad job.

Just how bad a job was made clear by documents obtained by Dr David Lowry under freedom of information.

Lowry, a member of the Energy Secretary's geological disposal implementation board and of the independent Nuclear Waste Advisory Associates, has been a perceptive commentator on nuclear policy for some years.

The documents he got revealed that the government body in charge of Sellafield had a very low opinion of Nuclear Management Partners and its work.

John Clarke, chief executive of the Nuclear Decommissioning Authority (NDA), the official organisation in charge of Sellafield, wrote to Nuclear Management Partners chairman Tom Zarges in November 2012.

Clarke told Zarges that "performance is not where we would like to be at Sellafield."

To show how badly Clarke felt about Zarge's company, he enclosed some PowerPoint slides from a recent seminar called "What is the frustration/dissatisfaction at Sellafield?"

The bottom line was an "insufficient delivery of the priorities in high hazard areas."

The NDA said that "to have confidence and trust in SLC management" is a "desired attribute." The NDA wants, but does not have, either confidence or trust in Nuclear Management Partners.

The NDA was worried about Nuclear Management Partners' "quality of leadership."

In the most damning notes, the NDA's slides said that Nuclear Management Partners took the "commercial decision over 'right' decision" and showed a "lack of ownership of the challenge."

This goes to the heart of privatising critical services. Private firms like Nuclear Management Partners put profit before the "right" decision.

In management speak terms, they don't "own the challenge" - they can always walk away, whereas the public sector cannot.

Because the government must deal with critical services - be they dirty nuclear sites like Sellafield or hospitals or probation services - but private contractors can just walk away, there is always an inherent imbalance.

There is always a danger the private contractors will take the money but leave the state with the responsibility.

In business-speak, "risk" is not transferred to the private contractor, but the money is.

The NDA said it was "not sure if Nuclear Management Partners is a service provider or operator" - that is, did it take full responsibility for Sellafield or was it just squeezing cash out of the plant in return for some limited work?

NDA's chief executive warned Zarges that it wanted to negotiate a new, better contract with Nuclear Management Partners but added: "We are looking at other options which are credible and acknowledged by our board and HMG" - that is, the NDA was considering renationalising Sellafield with the backing of her majesty's government.

But then something strange happened. The NDA gave Nuclear Management Partners a five-year contract extension up to 2013.

This month, MPs on the public accounts committee expressed surprise that Nuclear Management Partners got the new contract.

The NDA was clear that it did not like the way the firm was working, but still renewed the contract without getting guaranteed improvements.

According to the public accounts committee report, "the authority extended its contract with Nuclear Management Partners despite the poor performance to date and the fact that the contract does not transfer risk to Nuclear Management Partners."

This is a huge contract. As the public accounts committee notes, "costs rise every year and the latest cash estimates for dealing with nuclear waste on the site exceed £70 billion in cash terms."

But with Nuclear Management Partners, "little improvement has been achieved for extra money spent."

So oddly, the government claims it did not get involved in the contract renewal, leaving it to the NDA as an "operational matter."

But before Nuclear Management Partners was reappointed at Sellafield, it made its own appointment.

Nuclear Management Partners is led by US firm URS, working alongside France's Areva and Britain's Amec.

In June 2013, outgoing Tory cabinet minister and close Cameron confidante Lord Strathclyde took up a new job as "senior adviser" to URS.

Once upon a time Cameron made a speech about the "next big scandal" of "corporate lobbying."

He said: "We all know how it works. The lunches, the hospitality, the quiet word in your ear, the ex-ministers and ex-advisers for hire."

However, last November the speech was permanently deleted from the Conservatives' website.

But the practice still seems to go on, with ex-ministers for hire by big firms making big money on bad public services.

The failures at Sellafield are a warning about our new nuclear programme. Companies can always shuffle off with the profits, leaving us with a "legacy" that lasts hundreds of years.

They are also a warning about any critical service privatisation, where cash can be transferred to the contractor, but "risk" stays with us. They get the money, we clean up the mess.

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