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Select committee inquiry

Brexit and the implications for UK business: Civil nuclear sector inquiry

Closed

Business, Innovation, Science and Trade Committee · Opened 14 September 2017 · Closed 14 September 2017

7 recommendations · 7 conclusions
Inquiry on parliament.uk ↗

What the inquiry looked at

“This is the civil nuclear sector strand of the Committee's Brexit and the implications for UK business inquiry . It is not possible to provide a meaningful financial estimate of the impact of leaving Euratom but all the evidence suggests that the impact on the UK civil nuclear sector will be considerable. The UK will lose influence and have to bear increased costs. There may be some opportunities for expanding trade outside the EU, but for the most part these are not affected by our membership of Euratom. There are no obvious advantages from regulatory divergence, nor is the industry or Government pursuing this objective. The Government should seek to agree its future relationship with Euratom as early as possible during the negotiations in order to minimise unnecessary expenditure and provide greater certainty to the sector. Terms of reference: Brexit and the implications for UK business”

The committee's words, from the inquiry page on parliament.uk ↗.

What it found

In the committee's words, from the summary of 2nd Report - Leaving the EU: implications for the civil nuclear sector ↗

This report examines the impact on the civil nuclear sector of the UK’s departure from the European Union. Our departure from the European Atomic Energy Community (Euratom) is an apparently necessary consequence of Brexit, but not an outcome advocated by anyone in the sector.

At present, 21% of our power is provided by nuclear energy. The flow of nuclear goods and services cannot continue without a safeguards regime which is currently provided by Euratom.

We welcome the Government’s commitment to ensure that there is no dilution of our nuclear safeguards from current Euratom standards, underpinned by the Nuclear Safeguards Bill, which is currently before the House. However, we conclude that it is highly doubtful that it will be possible for the UK to implement Euratom-equivalent safeguards by March 2019, and even the less stringent requirements of the International Atomic Energy Agency (IAEA) will be challenging to deliver. The only viable route to achieving the Government’s objectives is for Euratom to continue managing our safeguards regime. We therefore believe that the Government should seek to achieve in the negotiations as close as possible an association with Euratom, if we are required to leave. If it is unable to secure this outcome, it should ensure that transitional arrangements last long enough for our own Office for Nuclear Regulation to be able to take over.

We believe that this would be consistent with the terms of the Phase 1 Negotiations Report, agreed between the UK and EU and published on 8 December 2017. In view of our doubts about developing our own capabilities, we call on the Government to indicate clearly, at an early opportunity, its plans for implementing contingency arrangements regarding safeguards and a commitment to keeping the House updated on progress.

The Government must also ensure that the UK is able to continue trading with other countries through Euratom’s existing nuclear cooperation agreements until such time as new agreements can be established.

In negotiations on withdrawal, the Government should seek to take account of the significant skills shortages at all levels that might otherwise affect the planned nuclear power station building programme, as well as ongoing civil nuclear activities.

The UK hosts important nuclear research facilities, for example the Joint European Torus (JET) at Culham, and the Government should continue to fund and cooperate on this and other research projects run by Euratom.

It is not possible to provide a meaningful financial estimate of the impact of leaving Euratom but all the evidence suggests that the impact on the UK civil nuclear sector will be considerable. The UK will lose influence and have to bear increased costs. There may be some opportunities for expanding trade outside the EU, but for the most part these are not affected by our membership of Euratom. There are no obvious advantages from regulatory divergence, nor is the industry or Government pursuing this objective.

The Government should seek to agree its future relationship with Euratom as early as possible during the negotiations in order to minimise unnecessary expenditure and provide greater certainty to the sector.

What the government said

The government responded on 8 March 2018.

Summary written by Accountability Index from the government's response.

The Government welcomes the Committee's report and says its objective is a "close association" with Euratom, with the exact nature of the future relationship "subject to negotiations" with the European Union.

  • On safeguards, the Government says it is "confident" that the ONR will be able to deliver a domestic regime to international standards "by March 2019", and that it is committed to going further to reach standards equivalent to Euratom's "as soon as possible".
  • On transitional arrangements, it proposes a time-limited implementation period covering Euratom, but says its exact nature "will be subject to forthcoming negotiations" with the European Commission.
  • On nuclear cooperation agreements with Australia, Canada, Japan and the USA, it expects drafting to be complete in summer 2018 and ratification in all four countries by the end of 2018, with entry into force in March 2019.
  • On research, it says it intends to seek a "close association" with the Euratom Research & Training Programme, including ITER and JET, and on reporting it has committed to quarterly updates on progress on Euratom.

Read the government's response ↗ Read the report ↗ Report an error

How the inquiry ran

Each dot is a dated item listed on this page, from the inquiry's opening on 14 September 2017 to 5 March 2019.

  1. Oral evidence 1 Nov 2017
  2. Report 13 Dec 2017
  3. Government response 8 Mar 2018
  4. Correspondence 5 letters

What it recommended 7 recommendations · 7 conclusions

1The UK’s departure from Euratom is an apparently necessary but unwanted consequence of exiting the...
Concluded (the committee's words)
The UK’s departure from Euratom is an apparently necessary but unwanted consequence of exiting the European Union. The Government’s task is to minimise the potential adverse impacts of this departure.
2Establishing a UK-operated safeguards regime by the time of our departure will be difficult, and...
Recommended (the committee's words)
Establishing a UK-operated safeguards regime by the time of our departure will be difficult, and is likely to be costly. It is highly doubtful that it will be possible to implement Euratom-equivalent safeguards by March 2019, and even the less stringent requirements of the International Atomic Energy Agency (IAEA) will be challenging to deliver. We recommend that the Government provides to the House, before report stage of the European Union (Withdrawal) Bill, a detailed timeline setting out progress in establishing an alternative UK safeguards regime; and that it commits to providing further updates on a quarterly basis up to March 2019.
3The Government should honour its commitment not to reduce existing safeguards regulation.
Recommended (the committee's words)
The Government should honour its commitment not to reduce existing safeguards regulation. As far as we are aware, the only viable route to achieve this aim is for Euratom to continue managing and operating safeguards in the UK, for the short term at least. This could be consistent with the terms of the Phase 1 Negotiations Report, if the UK assumes ultimate responsibility for international safeguards, but contracts out delivery to Euratom. We recommend that the Government should seek to achieve this aim in negotiations, and to do so as soon as possible, in order to minimise the nugatory expenditure on the establishment of alternative domestic arrangements.
4If the Government is unable to secure agreement for Euratom to continue delivering the UK’s...
Concluded (the committee's words)
If the Government is unable to secure agreement for Euratom to continue delivering the UK’s safeguards regime, it should as a minimum seek transitional arrangements that would extend Euratom’s existing role in UK safeguards until the ONR is ready and able to take over safeguarding responsibilities, including adherence to Euratom safeguards standards.
5The evidence we have gathered does not support the Government’s confidence that nuclear cooperation agreements...
Recommended (the committee's words)
The evidence we have gathered does not support the Government’s confidence that nuclear cooperation agreements with the USA, Canada, Australia and Japan will be in force by March 2019. Any hiatus in their provision would present a material threat to nuclear trade. No deal in relation to nuclear cooperation agreements is not a viable option. The Government must therefore, at the very least, secure transitional arrangements that enable the UK to continue trading with the USA, Canada, Australia and Japan through Euratom’s existing nuclear cooperation agreements until such time as new agreements between the UK and these countries can be established.
6There may well be opportunities to expand nuclear trade, but the extent to which these...
Concluded (the committee's words)
There may well be opportunities to expand nuclear trade, but the extent to which these arise from Brexit is far from clear. Those which have been identified are neither Leaving the EU: implications for the civil nuclear sector 27 sufficiently certain nor substantial to justify departing Euratom on economic grounds. In many cases, they arise from less demanding regulatory and supervisory requirements—a route which the industry does not advocate and the Government has rightly rejected. We trust the Government will support trade expansion in its development of the nuclear sector deal under the Industrial Strategy.
7We recommend that the Government seeks to maintain the existing benefits of EU R&D collaboration,...
Recommended (the committee's words)
We recommend that the Government seeks to maintain the existing benefits of EU R&D collaboration, for example through an agreement similar to those held by Switzerland and Ukraine with Euratom.
8The Government should also seek clarity and update the House with its assessment of how...
Recommended (the committee's words)
The Government should also seek clarity and update the House with its assessment of how the Austrian presidency may affect the chances of the timely resolution of JET’s funding. If this does appear to be a material concern, the Government should fast track the funding negotiations, and put in place contingency arrangements, not dependent on a European Commission decision, to allow JET’s continuation until the negotiations are resolved.
9In determining its negotiating objectives on freedom of movement and subsequent immigration policy, the Government...
Recommended (the committee's words)
In determining its negotiating objectives on freedom of movement and subsequent immigration policy, the Government must ensure that progress on strategically vital projects such as nuclear power plants is not jeopardised by restrictions in the supply of workers at all skill levels.
10The Government is right to press ahead with establishing alternative arrangements as quickly as possible,...
Concluded (the committee's words)
The Government is right to press ahead with establishing alternative arrangements as quickly as possible, facilitated by the necessary legislation. There should be no delay. But it is important to establish by early 2019 that should we need longer than two years, there is sufficient flexibility to allow an extension, whether as part of the overall agreement or as a separate arrangement relating to Euratom.
11We welcome the Minister’s pragmatic suggestion that the European Court of Justice may continue to...
Concluded (the committee's words)
We welcome the Minister’s pragmatic suggestion that the European Court of Justice may continue to play a role in the UK’s civil nuclear sector, and we see no reasoned objections to this approach. The well-established and significant economic benefits of close association with, or membership of, Euratom should not be put at risk to escape any hypothetical and unidentified adverse impact on the civil nuclear sector arising from European Court of Justice jurisdiction.
12We agree with the Government that the UK should seek an association with Euratom that...
Concluded (the committee's words)
We agree with the Government that the UK should seek an association with Euratom that is as close as possible to existing arrangements, and which replicates the functions already conducted on the UK’s behalf by Euratom.
13Given the Government’s stated intention to achieve the “closest possible” relationship with Euratom, it is...
Concluded (the committee's words)
Given the Government’s stated intention to achieve the “closest possible” relationship with Euratom, it is essential that the UK retains the maximum level of influence 28 Leaving the EU: implications for the civil nuclear sector possible in Euratom policy making. As a minimum, the UK must maintain ongoing engagement with, and preferably membership of, existing advisory European bodies.
14The international nature of civil nuclear, and the reach of international nuclear law, mean that...
Recommended (the committee's words)
The international nature of civil nuclear, and the reach of international nuclear law, mean that the advantages of securing greater sovereignty are negligible. The British public deserves clear communication of the implications of any Brexit deal ahead of it taking effect. The Government should acknowledge that any gain in sovereignty arising from our departure from Euratom will come at the cost of diminished influence.

Evidence

Oral evidence sessions 1

Correspondence 5 letters