The�Sellafield�nuclear reprocessing site near Seascale in Cumbria

Sellafield costs soaring past �70bn says committee

Costs at the Sellafield nuclear site are soaring to "astonishing" levels, with latest estimates putting the figure at £70bn and rising.

The Public Accounts Committee (PAC) said progress on decommissioning and reprocessing at the site in Cumbria had been "poor", with targets missed, costs "escalating" and timescales slipping.

A report from the committee last February put the cost at $67.5bn, warning the figure was likely to rise, and the MPs have now called on the Nuclear Decommissioning Authority (NDA) to terminate the contract of private consortium Nuclear Management Partners (NMP) if its performance does not improve.

The consortium was brought in six years ago to help Sellafield improve its performance and had its contract extended last October despite what the committee described as "spiralling costs and poor performance".

Margaret Hodge, who chairs the committee, said costs were rising to astonishing levels, such as the doubling to £729m of one project on storage silos over 18 months to last September, while another project had been put back six years to 2023.

She said: "Cleaning up the nuclear waste on this hazardous site is estimated to cost more than £70bn in cash terms. What's worse is that the cost is likely to continue to rise. The NDA, which owns Sellafield and which appointed NMP, said itself that it did not expect NMP to meet its savings target for the first five years – despite NMP being on course to earn £230m for the job.

"Time-scales have slipped and reprocessing targets have been missed. NMP has failed to provide the clear leadership, strong management and improved capabilities for the job. There has been a high turnover of executives and NMP has failed to train staff with the right skills and experience. Instead it used expensive NMP staff – at an average cost of £300,000 per expert in 2012-2013."

Hodge said the authority should monitor progress and terminate the contract if NMP's performance does not improve quickly, adding : "We are not confident that taxpayers' interests are being protected in the contractual relationships between the private companies involved in managing and operating the Sellafield site.

"The authority has also not properly explained how it is going to deal with the large stock of plutonium stored at Sellafield at a cost of around £40m a year.

"It wants to build a 'MOX' plant for converting plutonium into fuel for nuclear power stations, but no UK power stations can use this kind of fuel. Even if they could, the cost of building and operating a MOX plant would be more than the value of the fuel produced. It just doesn't make sense."

The committee called for the National Audit Office to review the NDA's approach.

A Department for Energy and Climate Change spokesman said: "Tackling the UK's nuclear legacy is of the highest importance to Government and we closely monitor the work of the NDA and its contractors.

"Our goal is to ensure that the nuclear legacy at Sellafield is made safe, decommissioned and cleaned up, and in a way that best delivers value for money.

"We take the concerns the Public Accounts Committee have raised very seriously. We will consider their findings and recommendations before providing a full response in due course."

John Clarke, NDA chief executive officer, said: "We have made good progress towards implementing the recommendations laid down by the PAC following its original report into Sellafield last year and will now focus on achieving the aims of the six recommendations set out in this latest report.

"Both NMP and the NDA now have a much better understanding of the issues and complexities that exist at the site and the challenges that lie ahead. Whilst progress has been made on a number of fronts we will require significant improvements during the next contract period.

"We have had extensive discussions with NMP and made clear where these improvements must be made. We will continue to monitor performance closely and remain focused on achieving our goal of safe, effective, value for money decommissioning at Sellafield, as we are seeing elsewhere across our portfolio of sites."

NMP chairman Tom Zarges said: "The challenges at Sellafield are unprecedented, with complexities exceeding any other operational or decommissioning nuclear site in the world, therefore demanding extraordinary technology and skills.

"The first term of our contract has been characterised by many successes but also a number of disappointments and areas for improvement.

"Our job now is to build on our experience of the last five years to safely and reliably deliver our customer's mission, while further accelerating the pace of change and providing value for money to the NDA, Government and the UK taxpayer."

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