22
Examination of witnesses
Mike Finnerty and Dr Nicola Crauford.
Q1 The Chair: Good morning. This is the Industry and Regulators Committee of the House of Lords. We are meeting today to look at the Office for Nuclear Regulation, which is an area that we have not looked at previously. Our witnesses this morning are Mike Finnerty, who is the chief executive of, and chief nuclear inspector at, the Office for Nuclear Regulation (ONR); and Dr Nicola Crauford, who is the chair of the Office for Nuclear Regulation. Thank you very much for coming, and welcome to both of you.
It is fair to say that neither of you has been in these specific roles for very long. You, Mike, have quite a bit of experience of the industry, I think. Nicola, you have quite a bit of experience of regulation, including in New Zealand; if there are things coming out of that from which you think we could learn, we would be happy to hear about them from you.
Perhaps you could start by telling us what you think your core roles are. What have you been charged with doing by Government and Parliament? Do you think that there is clarity around your roles, meaning that people understand exactly what you are charged with?
Dr Nicola Crauford: I will start with the role, then move on to role clarity after that. We are proud to be a strong, independent, credible regulator that inspires public confidence and is respected by the sector. The ONR is the UK’s independent nuclear regulator for safety, security and safeguards. Our mission is to protect society by securing safe nuclear operations. Our activities cover the design, construction, operation and decommissioning of nuclear facilities in the civil and defence sectors. I will let Mike elaborate a little; I will then come back to clarity of role.
Mike Finnerty: As the regulator, we have many powers, given to us via various pieces of legislation and regulations. We operate in a goal-setting regime that is very much focused on outcome. We take an enabling approach to our regulation.
The goal-setting regime is fairly, though not completely, unique. Most regulatory bodies around the globe offer a prescriptive regime, but we work with a goal-setting regime. This is really important because it offers a number of benefits to the duty holders; they are free to make choices about how they meet the various regulations, as the regime is not prescriptive. For us, as a regulator, we absolutely can take this enabling approach. We work, in essence, to drive continuous improvement.
Another key aspect of the framework within which we operate is that it lends itself very well to innovation and technology advancements. So it has a number of benefits.
Dr Nicola Crauford: In terms of clarity of role, our role is to protect society by securing safe nuclear operations. Our powers are generally adequate, although we are working with the Government, the Department for Work and Pensions (DWP) and the Department for Energy Security and Net Zero (DESNZ) on how our powers will need to evolve as the industry changes—as you know, there has been significant growth in the industry—in terms of powers relating to security, for example. A steer from the Government on their strategic objectives would be helpful, particularly with regard to us building future capability for an expanding sector and prioritising our work.
The Chair: We will come to some of those specifics later on but, obviously, the Government’s broader policy framework is important to everybody—and somewhat controversial. Do you feel free from all of that controversy? Do you think that you can operate as a regulator regardless of the backdrop that is there?
Dr Nicola Crauford: Yes, pretty much. We are an independent regulator so our decision-making is independent. That is well respected by Government, I think. We have not felt that to be under pressure; I know that it has been in jurisdictions other than the UK. We are very grateful for that.
Mike Finnerty: As I mentioned, we are an enabling regulator, which means that we work hard and constructively with both licensees and Government to understand our priorities and objectives. However, that does not compromise our independence in regulatory decision-making. The duty holders and Government understand that that is very much a red line. We have a healthy relationship with licensees and Government, but that red line absolutely exists; independence with regard to our regulatory decision-making is absolutely paramount.
The Chair: We will follow up on some of those items.
Q2 Lord Udny-Lister: I want to ask you about safety issues; it is a two-part question, really. What are the most significant safety issues facing you with regard to nuclear sites, including how they are managed by the operators and other authorities? Secondly, is cybersecurity now as big an issue as physical security? I would welcome your comments on that.
Dr Nicola Crauford: The ONR oversees the entire life cycle of nuclear facilities, from design and construction through to operation, decommissioning and, eventually, site closure. The hazards across the life cycle can be very different, but two common ones that might challenge nuclear safety and security are ageing infrastructure and capability.
Mike Finnerty: There is a wide variety, because of the size of the life cycles, of hazards and risks that we regulate against. We have highlighted these two.
Ageing is an issue across the sector. For example, we recently permissioned some ageing docks at Devonport dockyard to accommodate submarine maintenance; liaising with the licensee to bring those facilities up to the appropriate standard was a challenging exercise. The example that a lot of people are probably familiar with is Sellafield, which has a number of ageing facilities. It has some particularly hazardous facilities—notably, legacy ponds and silos. There, doing nothing is not acceptable because the facilities are ageing and the risk is continually going up. So we have engaged closely with the Nuclear Decommissioning Authority (NDA), Sellafield, the licensee and the Government. We have used that as part of our enabling process, which is called G6 and on which I can elaborate further as we go through. This has really helped us to influence the NDA and Sellafield in addressing the hazards in those facilities; they are making strides to do so but this is a long process.
The other common area of risk is capability. It is absolutely the case that industry has issues with regard to its expertise. We have an ageing workforce in many cases, and industry is struggling to replace that expertise. In fact, we have seen examples in recent years where some of the decision-making has not necessarily been optimal and has resulted in near misses and, sometimes, events. You can identify the expertise of the workforce as a common thread: they either have not had sufficient training or are not sufficiently experienced in the processes. Those two are common issues but, as I said, there is a spectrum of risks across the sector.
On cybersecurity, the things in any nuclear risk are the consequences and whether there is the potential to lead to a radioactive release. We are giving cybersecurity an awful lot of attention now. In fact, it was one of the previous chief nuclear inspector’s themes because we needed to work with industry, as this is a developing field, to ensure that there are appropriate controls over cybersecurity. However, at this point, I do not believe that there is a situation where a cybersecurity event could lead to a radioactive release. This is because most of the industry has hard-wired, engineered controls in place. For example, if there were a cybersecurity attack on the reactor fleet, it would influence some of the systems and so on, but the last line of defence is that the control rods would drop into the core. These are mechanical and hard-wired, so that would shut the core down to prevent any radioactive release.
Nevertheless, that does not mean we are complacent. We absolutely need to understand how technology could evolve. The use of artificial intelligence could perhaps come into the nuclear sector and be used more prevalently. We have to be absolutely tuned to the risks, and the licensees have to understand exactly what the risks are with this technology.
Lord Udny-Lister: I want to jump in and ask a quick supplementary on safety and environmental issues. You share responsibility with the Environment Agency. How does that work, particularly with regard to Sellafield?
Mike Finnerty: The Environment Agency has its own vires and inspects things such as discharges to ground, water and so on. I mentioned the G6 approach. It might be worth me elaborating a little on that at this stage.
This approach was developed by us, the ONR, as the chief regulator. We worked with the Environment Agency and the Government in the space of (Department of Energy & Climate Change) DECC, as it was at the time, as well as with UK investment projects, the licensee—Sellafield—and the NDA. We worked together to take a collaborative approach specifically aimed at the legacy plants on-site, because, as I said earlier, doing nothing was not an option. We felt that Sellafield was not making sufficient progress on taking this forward. We identified a common purpose: accelerated risk and hazard reduction at the Sellafield site. All partners worked closely together both to regulate in a proportionate way that looked for fit-for-purpose solutions and to focus on where the biggest risks and hazards were. This illustrates the way in which we work closely with the Environment Agency. It has separate regulations, but those do not compromise or conflict with each other. We have a strong working relationship, particularly at ground level, in terms of how we regulate the hazards.
Q3 Viscount Thurso: Good morning to you both. I want to follow up on the safety issues. You said in your answer to Lord Udny-Lister that there was some not optimal decision-making, which is probably one of the greatest understatements of all time. You put it down mostly to people not having the experience or the knowledge. However, we have heard some fairly compelling reports—there have been a number of articles and other reports—suggesting that, particularly at Sellafield, there is a cultural problem. It is the old culture. I should say that I am speaking to you seven miles from Dounreay on the north coast of Scotland, which I know well; I know about its problems and what it has done to address them. To what extent do you think there is a cultural issue, particularly at Sellafield?
Dr Nicola Crauford: I will start; Mike can add anything if he feels the need. Sellafield is, as you know, a high-hazard site with complex challenges. The ONR has ongoing interventions in place to scrutinise both the leadership and the culture there. We have also investigated some whistleblowing concerns and media articles. We have found no evidence that issues such as racism, bullying or harassment have directly or indirectly impacted safety or security on the site. We continue to monitor the situation and to emphasise the need for a positive culture. I must say, we do not intervene in employment issues, which are rightfully Sellafield’s and not ours.
Viscount Thurso: Can you amplify that? By cultural problems, we are not talking about racism, sexism, bullying or anything else. Here at Dounreay, seven, eight or nine years ago, we had a problem when the operator left the lids on the drums when he was filling them with cementation. The net result was that what should have been going into the drums poured on to the floor. It was discovered that the reason behind that was familiarity with the system: he had been there so long that, when a red light showed to say that something was not operating, he ignored it because he thought he knew better. So, by culture, I am talking not about employment culture but about, “We know best. We’ve been here for 30 years. We know how it’s built so I’ll do it my way”. That is the culture issue I ask you to address.
Dr Nicola Crauford: Mike will amplify that in a moment but I must emphasise that we have investigated a number of issues. We talk constantly to Sellafield about its culture and emphasise to it the need for a good culture throughout its organisation. I emphasise that we have investigated any concerns that have been raised with us and found no evidence that they would directly or indirectly impact safety or security.
Mike Finnerty: A strong aspect of our regulatory framework is not just the fact that it is goal-setting but the relationship that we have with the licensees.
We have inspectors who are attached to a particular licensed site and spend a number of weeks during the year engaging with the licensee to build up this relationship. They are also the eyes and ears on the site as well.
We do not just speak to operators; we also speak to the leadership chain and people like safety reps as well. The cultural aspect is a very key part of what we look at. It is part of the licence conditions. It is about the organisations having suitably qualified, experienced personnel. We also look at the softer side as well, to actually understand what the safety culture is for a particular licensee.
Earlier, I mentioned the suboptimal decision making. This is what we see. When there are incidents like this, we then inspect further. We look deeper into this and actually get the licensee to do its own investigation into what has happened. They report their findings to us, and if we need to take further action, either softer enforcement action or even greater enforcement, we will do so. That is all part of our holding industry to account.
I believe that we take safety culture on the sites very seriously. It is a key part of our interventions and regulation to ensure not only that engineered systems are fit for purpose and adequate for nuclear safety, but also the cultural aspects as well.
Q4 The Chair: You have had whistleblowers who have expressed some very significant concerns about the casual nature of some aspects. In those circumstances, are you saying that you go to Sellafield and say, “Tell us your side of the story”, and then accept what they are saying?
Mike Finnerty: I would not necessarily say we accept what they are saying, but we would look for the evidence if we felt there was something wrong, and we would speak to various people depending on the situation. If a serious event was being reported, we would take it very seriously. We would do our own investigation, and if there was more to follow up on, we would follow up on this under the duty to hold to account. I have to admit that on many whistleblowing cases, there is no further action to be taken, but if there is, we can do that.
The Chair: It might be somebody reporting an attitude rather than a serious event. It is quite difficult to investigate attitudes.
Mike Finnerty: It is, and this is where the relationship we have with the duty holders is really important. We can go to the individuals themselves and the teams they are involved with. Safety reps are a very good source of information. We have a very good relationship with the unions and with the safety representatives on site, as well as the leadership and management.
After all, the licensees are responsible for nuclear safety and security on the site as well. It is down to them to articulate to us why they believe that the situation is safe. As I said, if it is a cultural issue, they have to demonstrate that they have the right people with the right attitudes and the right safety culture on site.
Q5 Viscount Thurso: Just to follow up on that, can you explain why Sellafield was taken out of special measures for its physical safety in February, despite the ONR giving the site improvement notices in the month before and the month after? Are you satisfied that the physical safety risks are properly managed at the site, and how do you monitor that?
Mike Finnerty: The situation at Sellafield is quite complex in terms of our attention levels. Our normal attention level for a site is routine attention. This means that the site for either of our purposes, nuclear safety or nuclear security, will have a routine level of inspection.
For nuclear security—physical security—we raised the attention level to enhanced because we had some specific concerns regarding leadership and the qualification of personnel on site. Also, we expected one of the facilities, the main control and command facility, to be brought into operational status, but they were very slow to do so. We gave them an enhanced attention for this.
We had a number of interventions at Sellafield. This culminated in their annual security exercise in November 2024, at which we were satisfied that they had accommodated all the improvements necessary. We followed this up with a further robust inspection. After that, we were satisfied that for physical security, they could come back down to routine attention. Because it is routine attention, we can still issue improvement notices if we think that it is the appropriate action to take. We do this with lots of sites if they are at routine attention, but that does not necessarily mean we would elevate it.
Viscount Thurso: Can I just check on that? Are we talking, then, about the CNC (Civil Nuclear Constabulary) and that level of physical security?
Mike Finnerty: That is right; it is physical security. Just to clarify, cybersecurity at Sellafield is in significantly enhanced attention, as is nuclear safety for the legacy ponds and silos, whereas normal safety across the site is at enhanced attention. There are various levels that we choose for Sellafield.
Viscount Thurso: I have one final quick question. Would it be fair to say that both Dounreay and Sellafield were experimental sites where the immediate post-war attitude was to get the job done, find a way through and solve the problem? Most of our other sites are operational sites where the attitude was to build it according to the design and operate it. Some of the legacy cultural issues come from that attitude of, “Let’s get the job done because we need to find this out”, rather more than just operating it safely. Would you say there is some truth in that?
Mike Finnerty: There was an element of truth back in the day. Now, the industry has moved on to an extent that the management for both of those sites understands what is required of a modern site, and they meet the regulations appropriately.
Q6 Baroness Valentine: I have two questions but will first reflect on that. Listening to this conversation about culture, I have an impression of a place where local people are recruited for jobs and there is sort of a sense of “man and boy you stay in the same job”. If that is so, there would normally be the sorts of cultural issues that we think there are at Sellafield. How are you dealing with that? Do people get removed from jobs if they have spilt something that they should not have spilt, or anything like that?
Mike Finnerty: There is an element of that. If you look at where the nuclear sites are around the country, communities are employed at particular sites and have been for decades. Again, I repeat that it is the licensees who are responsible for safety. They have to assure themselves that they have the right level of safety culture and that they understand what is required in the regulations. They take people to task and hold people to account if they have an attitude which is not conducive to nuclear safety. Similarly, if we are on site and see things, we will either report it to the management, to influence in that way, or we have the opportunity to take firmer enforcement action.
Dr Nicola Crauford: Can I just make a comment there? The culture of an organisation goes hand in glove with its leadership. We work very strongly with Sellafield and the NDA in order to try to improve the leadership, ensure they are doing their part in holding people to account, and so forth. That has been a bit of a struggle, but we have seen quite a lot of improvement of late.
Baroness Valentine: I will ask the questions I am supposed to ask. If you do not mind, I will ask the two together, because they are both connected to funding—so it will be slightly long. To what extent are safety concerns at nuclear sites caused by the level of public funding provided to the NDA? How involved are you in funding discussions on those issues with Ministers in the Department for Energy Security and Net Zero and the Treasury?
My second question is, does the Office for Nuclear Regulation have the resources that it needs to effectively oversee nuclear sites and operators more generally? If not, should nuclear companies be willing to pay increased fees in order to improve the regulator’s capacity? Would there be a need to provide greater public funding? Shall we start with NDA and then move on?
Dr Nicola Crauford: Starting with the funding of NDA, the ONR is not involved in funding decisions with the Government for NDA. We are not an economic regulator, and funding decisions are outside of our statutory functions. However, we are involved in discussions with NDA, DESNZ and the Government on priorities, particularly at Sellafield and in other areas. We are clear that the risks at Sellafield are intolerable. It is important that there is adequate long-term funding for NDA; that is essential in terms of bringing that risk down. If any additional funding was available, we would be supportive of that to the extent that it was able to help to reduce that risk over time. We would work with NDA and Sellafield in order to do that.
Mike Finnerty: Funding is quite a complex issue, I guess. As Nicki said, it is really important that the funding of Sellafield has longevity. The risks at the facilities, which, as Nicki mentioned, are intolerable—the legacy ponds and silos—will last for many decades, so it is important that they have sufficient funding.
As part of the G6, which I mentioned, one approach that we took that really helped to accelerate risk and hazard reduction was to encourage Sellafield and NDA to develop fit-for-purpose solutions. That was because some of the engineering equipment that they had was fantastic from an engineering point of view but highly complex, which meant that it had to undergo regular maintenance so was often out of action. This is a situation where, if the funding is not directed at the right level and the right activity, it can have a disruptive effect.
When you are decommissioning some plants, often the simple, less complex solutions are the best. That is where we look for fit-for-purpose solutions. We encourage Sellafield to be innovative and look for different solutions that will end up with positive outcomes, rather than just developing highly complex engineered solutions that may not necessarily always be the best option.
Dr Nicola Crauford: Moving on to resources, I think ONR feels that it has adequate resources at this time. That is not to say that we have an easy job; we do not. It requires prioritisation and requires us to work smartly and try to be as efficient as we possibly can in order to minimise the resource that we need. However, the sector is growing—the nuclear workforce is expected to grow from 80,000 people in 2024 to 120,000 by 2030, driven by new civil and defence programmes—and attracting and retaining specialist staff is a challenge. We expect that to be an increasing challenge, particularly in a highly competitive market where there will be increased demand across the sector. From that perspective, getting a true understanding of how the sector is likely to change in future, how it is going to expand and what the Government’s ambitions are is important to us so that we can plan.
On funding, we recover our costs from the industry that we regulate and from the government departments to which we provide a service. We are currently reviewing our funding model and working with DWP, our sponsoring department, to develop a more appropriate model for our needs because we do not think this one is quite right. For example, funding the development of future capability can be difficult. We cannot pass those costs on to the industry, and we need separate funding for that. So we are looking at what the options are and working very constructively with DWP on that, but we do not have an answer for that at this stage.
I should also say that we acknowledge the need to be efficient. As you commented at the beginning, both Mike and I are relatively new to our roles, and it is something that we will be looking at. We will look at how we can make the organisation be more efficient. Some of the easy wins have already been taken, and it may be difficult things that require some investment that can help the organisation to be more efficient, but we think there are things that can be done there.
Mike Finnerty: Technology is obviously one area that we could look at—how we could potentially use artificial intelligence for our benefit.
Q7 Lord Gilbert of Panteg: Specifically on artificial intelligence, the impression that we have got over a number of inquiries is that the public sector is way behind the private sector in the imaginative way in which it thinks about using artificial intelligence to improve efficiency, cut costs and increase productivity. Is that a fair impression generally across the public sector? Dr Crawford, you may have a point of view, given your wider experience. If so, how do we get a real step change? It is not just about you. How do we get a step change across the public sector, across bodies like yours, so that this opportunity is seized and is not just seen as a threat?
Mike Finnerty: One of the issues across nuclear is probably its risk aversion. That may be a legacy product, or there is an attachment to thinking that somehow nuclear is inherently risky, and that develops a natural risk aversion across the sector. It is one of the things that—again, looking at the G6 approach at Sellafield—we really try to break down, to accept or acknowledge that sometimes there may be a short-term increase in risk for long-term gains. With regard to our organisation, we have talked about looking at how in certain areas we can be less risk averse and adopt some of these technological innovations, including artificial intelligence but other areas as well, to see how we can use them for our benefit. That is something that we are talking to industry about as well for them to do the same.
We have developed a sandbox approach where we have gone to the industry and said, “You can trial things. Just tell us exactly what’s on your mind”. Sometimes I think the industry has been reluctant to share things with the regulators because they feel that if they come up with an idea, we will say, “No, that won’t fly”, and we will somehow hold them to account for that.
We have approached this by having sandbox approaches so that the industry has a safe space where it can test new ideas. We are seeing this coming through—it is testing new ideas and can do so in a safe space—but I agree that there is more to do. One of the things that we are really looking forward to, as part of our next strategy, is encouraging both the industry and ourselves to be less risk averse in certain areas in order to drive this technology for greater benefit.
The Chair: We are all wanting to follow up on the same point, I think. Do you understand why the public might not like the idea of you becoming less risk averse? You have talked about some of the issues around skills, some of the difficulties that Sellafield has had and some of the decommissioning problems. When the innocent abroad, such as some of us, hears you say, “We’re too risk averse”, the general public might have concerns about that.
Mike Finnerty: I agree. That is why, again, it is really important that we explain to stakeholders—in particular, the public—how we operate, including that we have sufficient checks and balances in place, that we have a robust regulatory regime, and that in areas where there are significant risks we will encourage the licensee to put appropriate controls in place and ensure that that happens, but that should not be a blanket over the whole industry.
This is one of the things that is driving the culture: sometimes, it is associated in the sense that, because it is nuclear, it is something special. It is as though there has to be a gold standard across everything that nuclear does. That is not the case. We can certainly play our part in this by influencing the industry to identify those areas where it can be less risk averse while explaining our exact approach to the Government or the public, reassuring them that the estate is still safe.
Q8 Baroness Valentine: I just want to follow up on our earlier conversation. It is a very quick thing, the answer to which may be long. DWP is your sponsoring department; I am surprised by that. Is that logical?
Dr Nicola Crauford: One reason for that is probably partly historical. The ONR was originally part of the HSE (Health and Safety Executive) but we were split off from it; obviously, the HSE is part of the DWP.
The other reason, I think, is to separate the policy arm from the sponsoring department and, in that way, to ensure the independence of the regulatory body. The DWP is not responsible for any activities in the nuclear sector but DESNZ is and could potentially influence the regulator, hence the separation. That is what I understand; I might be wrong.
Mike Finnerty: That’s right.
Q9 Viscount Trenchard: It is widely accepted that the GDA process for new nuclear designs and projects is expensive and time-consuming. Do you think that the processes are sufficiently smooth and responsive to meet what we hope the Government’s ambitions will be? The Government are slightly more positive about nuclear than they were, but some of us think that there is still a lot further to go. Do you think that the processes are going to work for a much bigger amount of nuclear generation and a bigger nuclear industry? Do you need improvements to the process, particularly to enable new types of reactors, including SMRs (small module reactors) and AMRs (advanced modular reactors), which will mean licensing potentially hundreds of sites across the country? Can delays and costs nevertheless be reduced without compromising on safety?
Dr Nicola Crauford: Actually, the UK’s regulatory system is recognised internationally as one of the most flexible in the world, as well as one of the quickest. We work hard to ensure that the ONR is not on the critical path for any decision-making for new nuclear, and we engage with the industry at an early stage. However, we are on occasion hampered by the maturity of new entrants’ designs; that is critical to how quickly we can operate. I will get Mike to explain the GDA process because we feel as though it has saved new entrants a significant amount of money and is a very quick process.
Mike Finnerty: The GDA process was designed to de-risk projects, in essence, so it is for prospective developers to come to the regulator so that we can do an assessment of their design in order to ensure that it has the potential to be built in Great Britain before the really expensive part—civil build—is undertaken. From a reactor developer’s point of view, once you are into civil build, if there are issues with the design at that stage, it is hugely expensive and very costly. So the idea of the GDA process is to identify any showstoppers in, or issues with, the design that would prevent construction in the UK.
One issue that we have seen with some of the GDAs is the design not being mature enough, where, once the design has gone through the GDA process and has an acceptance certificate, the design that is built subsequently does not quite reflect the design that went through the process. That can be really expensive. The other thing that we have seen during GDA processes is the safety case submissions coming to the ONR not being sufficient; there is work to be done there as well.
Nevertheless, despite all of this, we have actually shortened the GDA process and made it more efficient. By having early engagement with prospective licensees and developers, we can ensure that they understand exactly what is required from the GDA process so that they have a much stronger submission when they come to the process.
My final point is that you mentioned that we could see a situation where there are hundreds of SMRs. The GDA process was essentially designed for exactly that. If a developer wanted to go down that route, you would expect them to try replication as much as possible; if the design that comes through the process has the maturity and the stability to replicate many of these designs, we need to do it only once. There will be site-specific aspects, depending on where the SMR is located, but the main bulk of the assessment will have been done up front; that lends itself really well to that fleet approach.
Viscount Trenchard: I have two supplementary questions, I am afraid. First, assuming that there is a substantial increase in new nuclear projects, do you have the resources and staff to provide approvals in a timely way? Will the ONR be able, for example, to handle three or four GDA applications at the same time without that leading to significant delays and competition for resources?
Dr Nicola Crauford: We have already managed three or four GDAs at one time; that is my understanding. However, to answer your broader question, no, we do not have the resources. We would need to resource up; the question is how we will do that in as efficient a way as possible. As I have already said, attracting and retaining specialists in the sector can be difficult, particularly when the rest of the sector is gearing up as well.
Viscount Trenchard: My second supplementary relates to the AWE (atomic weapons establishment) and the submarine programme. I know that both of those programmes fall under defence regulations; nevertheless, you provide considerable assistance to them, I think. Will the expansion of those defence programmes, which is happening and will continue to happen more, have an adverse effect on the number of nuclear regulators that are available for the whole of the UK’s nuclear industry?
Mike Finnerty: You are correct. The AWE is a licensed site, so it comes under our remit. Aspects of the design of the components are under the defence regulator, but the site is predominantly under us. On the nuclear submarine programme, we regulate the build at Barrow, the core manufacturer at Rolls-Royce and some of the dockyards at Devonport. You are right: defence is a large sector that we regulate.
This is one of the reasons why, when we talk about engaging with government, it is with not just DESNZ but the Ministry of Defence, in order to understand exactly what their programmes look like and what their objectives are so that we can prioritise our work. Sometimes, it is not just focused on DESNZ but is a balance of how we regulate the defence sector. So far, via our prioritisation and by using the efficiencies that we have identified, we have been able to regulate that sector effectively, but it will be challenging as both of these sides of the industry are expanding.
Q10 Lord Gilbert of Panteg: I want to come on to staffing. How easy do you find it to recruit staff, in particular specialist staff, particularly in the areas of cybersecurity, data—this is presumably another area of high demand that is important to you—and other digital skills?
Dr Nicola Crauford: It is not easy. We find it difficult. It is a very competitive market. We have around 18 cybersecurity inspectors; at the moment, that is adequate, but I suspect that it will not be in future. We find it difficult to attract and retain both nuclear and non-nuclear staff, in particular specialist staff. We are competing against other areas in the sector that traditionally pay more, so it can be difficult.
Lord Gilbert of Panteg: Presumably, you are competing with other sectors, too, as some of the skills you require are not sector-specific; some of the data and technical skills apply across other commercial employers.
Dr Nicola Crauford: That is correct.
Lord Gilbert of Panteg: Is there any merit in or scope for much greater co-operation between regulators in developing substantial pools of talent, rather than each regulator hiring? Obviously, in the nuclear field specifically, you would hire, but I am thinking more about a range of digital and other technical roles; some of the digital regulators co-operate, for example. You may wish to address this from the perspective of your wider experience of regulation, as well as in this industry. Is there any merit in or scope for regulators and other public bodies to come together as a strong centre of expertise that is available to all of its component members?
Dr Nicola Crauford: We work with the nuclear sector as a whole on what our regulatory requirements or sector requirements will be, so we plan together with it. The different elements of the nuclear sector work together quite co-operatively on recruitment. We do some work with HSE on this, do we not?
Mike Finnerty: In answer to your question, yes. I talked about the goal-setting framework that we have in the UK; other sectors, such as the Office of Rail and Road and the Civil Aviation Authority, which is the aircraft regulator, use the same approach. They have specific regulatory skills. As you said, when you talk about things such as management arrangements and data, there are commonalities. In fact, we have taken individuals from other sectors—as you said, people with no deep specialist nuclear knowledge but a broader skill set—and they have been very effective regulators. There is scope, potentially, to look more widely at this in terms of how there might be a sharing of resource—I am not sure how, but certainly using some of the same skill sets—because that is appropriate.
Dr Nicola Crauford: Some of those other regulators are concerned that we might take some of their staff, I think; that is part of the problem in trying to make that work.
Lord Gilbert of Panteg: That is an indication of the tightness of the market: you are competing with not just commercial businesses but other regulators. It seems to me that something much more ambitious ought to be done about finding a strong centre of expertise, which would become a really attractive place for people to work and may be able to afford higher salaries if you all co-operated. You would all then be able to draw on this higher level of expertise, rather than competing with each other. I am not talking about nuclear-specific skills but, for data, you need people.
That is partly what I was trying to get at with the question about AI. I am not suggesting that you insert AI into your safety-critical functions and create some sort of nightmare, but all organisations could improve the way in which they operate through a more forward-looking, less risk averse use of AI. I wonder whether you ought to look at this with other regulators.
Mike Finnerty: You mentioned AI. Safety case production is one area that some licensees are actively looking at and having some success with. We might have a situation where you have a safety case produced and assessed by AI. There is a question of whether that goes too far, but there would obviously need to be lots of checks and balances in place. There is plenty of scope. As you said, the production or assessment of safety cases does not necessarily need specific nuclear skills.
Lord Gilbert of Panteg: If you can do what the private sector is doing and reduce operating costs—not your core costs—through this, you can then invest more into the kind of expertise that you need from these serious, expert people in order to deal with the safety-critical roles. The other side of that in any industry-regulator relationship is the revolving door. That can be a positive thing—you can get people who work in and understand the industry; the industry then understands where you are coming from—but it can be a negative thing when the relationship is not quite right. In your experience, is it okay in your industry?
Dr Nicola Crauford: Generally, it is quite positive. A number of our inspectors, for example, have transferred from HSE. On the point that Mike raised, there is quite a lot of similarity in our approach. Nevertheless, the revolving door can be a bit of a problem. Mike spoke earlier about having the experience and knowledge required to be an inspector in the type of regulatory regime that we are under, which requires quite a lot of discretion together with quite a lot of expertise. Too much of a revolving door means that you are constantly training up new people and they are not getting the seniority and expertise you require to do the type of regulation we- have. It is a bit of a balance.
Mike Finnerty: If I could add to that, the other potential worry is regulatory capture, if you have people from industry coming to us. We have strong, robust protections in place in our decision-making and in where we put individuals: once they come from a licensee, they will not regulate that licensee for a number of years. It is about those types of things.
Lord Gilbert of Panteg: It is regulatory capture that I was thinking about. Are you confident?
Mike Finnerty: Yes—that is not the case.
Lord Udny-Lister: May I come in with a quick question? How much of a barrier are Civil Service pay scales for your technical staff? Are you able to manoeuvre around them?
Dr Nicola Crauford: We have to take the Civil Service pay scales into account, but we are not restricted to them entirely. That does not give us a free-for-all but it helps a little; they are still a constraint, I would say.
Q11 Lord Best: My question is about your co-operation with other established nuclear nations, particularly in relation to approving reactor designs. The UK’s generic design assessment seems to be well respected internationally, but are there other ways in which one could pool expertise and reduce the time and cost of the UK’s approvals processes?
Dr Nicola Crauford: We work hard on international collaboration with other regulators. We have already created more efficient, harmonised approaches to reactor design assessment, benefiting both the industry and global nuclear safety. We make use of assessments carried out by other national regulators where possible, but every country has its own legal framework and standards; those will always act as a barrier to full global harmonisation.
Mike Finnerty: That is absolutely the case. It is one of the reasons why the International Atomic Energy Agency has developed a project called the NHSI, which stands for the Nuclear Harmonization and Standardization Initiative. This is designed to drive both industry and regulators to develop a more harmonised approach. Individual states have their own regulations and regulatory frameworks. Nevertheless, the agency believes—I am absolutely aligned to this—that large parts of a safety assessment, whether it is done by the French regulator, the US regulator, the Canadian regulator or the UK regulator, should, in essence, meet the same standard. That is something the NHSI is really trying to exploit.
On a more parochial basis, there are benefits in also using bilateral and trilateral arrangements. We have done the same thing with the US and the Canadians on one particular design where we are sharing information and assessments. We can have a much more efficient approval process and be much more efficient in terms of the assessment needed. It also enhances deployments: if three sovereign regulators have assessed the same design, that can lead to deployment in different countries much more readily. These are things that we are really starting to look at.
Before I did this job, just three weeks ago, I was at the agency for 16 months. This was one of the projects that the agency was driving hard to develop, working with sovereign regulators. Now that I am in this position, I can drive things from the ONR side to ensure that we have much greater collaboration, either bilaterally or trilaterally, with states that are looking at specific designs or are in this wider process to make things much more effective and efficient.
Q12 Lord Best: Have you picked up on any particular changes that you would like to see in the UK from your international experience—that is, “If only we did it like somebody else”? Are there any real lessons moving forward?
Mike Finnerty: I do not have any specific examples. However, I would say that the UK approach really lends itself to this type of collaboration because it is goal-setting. There are other sovereign regulators that are very prescriptive, and some points of detail remain sticking points, but the UK system does not have that approach because we are goal-setting. It is down to the licensees and the developers as to how they meet the legal requirements; it is much more flexible, so it lends itself to that approach.
The Chair: You have to have real confidence in whoever is signing off in another jurisdiction.
Mike Finnerty: You do. This is where our relationship with the other regulators comes in. We have a community of sovereign regulators that we hold in high esteem, such as the French regulator, the US Nuclear Regulatory Commission (NRC) and the Canadian regulator. They are well trusted and have high expertise. There is a high level of confidence there in sharing such assessments.
The Chair: If something were signed off in the US, Canada or any of those other countries, would you accept it almost automatically?
Mike Finnerty: Not necessarily—we would need to engage to see its approach—but there is a strong chance that we could work together to have some real collaboration, which we are beginning to see.
Q13 Lord Teverson: I want to explore your relationship with other organisations, such as devolved authorities, Governments and regulators. First, I want to take you up on a point that both of you have made. You are new to your jobs, right? When you start a new job, you have a thing in your mind: “That is how I want to make this my own. That is what I want to change”. What I would be interested to understand from both of you is the top three things that you have decided you want to make your mark on—just bullet points, not a long explanation—now that you have these appointments. Can we start with Nicola?
Dr Nicola Crauford: Greater efficiencies would be one of mine. What I observe in the ONR is that it is very good at making the regulatory decisions and is well respected throughout the sector, but there are some business disciplines that perhaps need improvement; that would be a focus of mine. By integrating the good regulatory work with better business efficiencies, we can get some greater efficiencies across the organisation.
Another area where I would want to see an improvement is in our relationships with the Ministry of Defence, DESNZ and DWP. I do not think that they are bad, but they could be better. For example, as a regulator, we are the only party that sees across the entire sector. We could be engaging with government at a much more strategic level, rather than on a transactional level, as we do at the moment.
Mike Finnerty: We regulate the industry effectively but, given the challenges that have been discussed today, I would like to see us being more productive; that is my first bullet point. I would like to see us being even more enabling; there is my second bullet point. The third thing would be to identify more fit-for-purpose solutions.
Lord Teverson: Thank you very much; those are useful.
Dr Nicola Crauford: I would add a third one. We need to do more on the point that has already been raised around workforce planning. There is much more that we can do on that. We need to be better at that.
Q14 Lord Teverson: How do you work with other organisations, devolved authorities and local authorities? There are many of those; I used to be a board member of the Marine Management Organisation, which gets upset about warming waters outside nuclear power stations. With the Nuclear Decommissioning Authority, it seems that, if you looked at it, you might think, “Why are there two regulators rather than one in that area?”
Dr Nicola Crauford: We work very hard to work collaboratively, particularly with other UK regulators. We learn from each other and share good practice. One example, which Mike gave earlier, is the G6; we have adopted that same approach in sites other than Sellafield. It is a priority for us to build stronger collaboration, to improve efficiencies and so on. We have a number of agreements and MoUs to clarify our role and to co-ordinate activities. Indeed, I meet personally with the chairs of a number of different organisations. The NDA is not a regulator. It owns the decommissioning sites—
Lord Teverson: I used the wrong term.
Dr Nicola Crauford: We work very closely with it. Again, we have a very strong relationship with the NDA, its subsidiaries and each individual duty holder and licensee. We work collaboratively, providing policy and strategic advice as well as advice on our regulatory frameworks.
Mike Finnerty: I would just add that the NDA is vital for the sector in terms of how it drives forward decommissioning at Sellafield, at Dounreay and across the estate. It has a really important role. We work well with the other regulators. We mentioned the Environment Agency earlier; there may be scope for looking at some of the resources there. For example, as part of the Environment Agency’s remit, it looks at the disposal of waste. We look at storage of waste. You could argue that the skills to deal with both are similar, so areas such as this—particularly where there are skill shortages—may be where we can somehow pool the resources, as we talked about, or make best use of the skills available.
Lord Teverson: In working with Wales, say, do the devolved authorities there have the resources, such as—
Mike Finnerty: Such as NRW, for example? I believe so.
Lord Teverson: I have to be careful because Lord Gilbert is over there, representing Wales to a degree. Does it have sufficient skills to work with?
Mike Finnerty: I believe that it uses some of the EA resource to enable it to discharge its duties.
Lord Teverson: Nicola, one of the three things you mentioned was better relations with government and government departments. Can you tell us a little more about that? As Baroness Valentine said, it seemed rather strange that you were there with the DWP, although I can understand that with the health and safety bit in the background. What needs to be sorted out in terms of government relations?
Dr Nicola Crauford: It is not a question of sorting them out; it is just a question of making sure that we have good relations with them, that there are no surprises and that we have co-operation. For example, I am personally working closely with DWP at the moment on the recruitment of new board members for the ONR; that has been an interesting and very co-operative process. DESNZ is involved as well, but it has been led by DWP, which has been very helpful in terms of my aspiration to raise the capability of the board.
Another area that I worked on, which I mentioned earlier, is the funding model, which we feel is perhaps not optimal and could be improved. Some of it is about the way in which we have interpreted the frameworks that we work within, rather than actually being constrained by the DWP. Again, we work more co-operatively there.
On DESNZ, as I say, we engage with it very well, but we do that on an issue-by-issue basis. We could potentially provide more of an overview as to what is required in the nuclear sector, particularly during this time of massive change.
Lord Teverson: Yes, I can see the importance of that. I have one other question; it comes back to security, in a way. A major investor in Hinkley C is the China General Nuclear Power Group. Do you have any say or look over the relationship, from a security point of view, with a Chinese investor in British nuclear power?
Dr Nicola Crauford: Not to my knowledge.
Mike Finnerty: I know that this is the source of discussions going back a few years, particularly with the Bradwell issue. Again, we would look at the security of Hinkley Point C on its own merits so, as a licensee, it would need to demonstrate that it has adequate arrangements in place to ensure that security is not an issue. We would also engage with other government departments on the identification of threats to the country. This all comes out as part of nuclear security plans that licensees and others would need to put in place.
Lord Teverson: Do you oversee that?
Mike Finnerty: It is the licensee’s responsibility as to how it sets itself up.
Lord Teverson: Who looks at that, though? Who ticks the box to say that the licensees got it right?
Mike Finnerty: That would need to be other parts of government.
The Chair: Can I follow up on one thing? Incidentally, Nicola, you just mentioned the appointment of new board members and said that there was good co-operation. Has it been timely? I have heard that, in other sectors, there have been significant delays in the appointment of board members. Are you finding that the length of waiting is a problem?
Dr Nicola Crauford: It is a long process.
The Chair: Is it too long?
Dr Nicola Crauford: Probably.
Q15 Viscount Chandos: The Government wish to prioritise growth and how regulators balance that. How do you see that affecting nuclear regulation? Going back to the general public’s view of the industry’s safety, which we were talking about, how do you think that will play with the public in increasing the concerns that they have?
Dr Nicola Crauford: The ONR has a big role to play in terms of the growth of the nuclear sector but also in terms of assisting the Government with energy security and reaching net zero, as well as aiding their ambitions in the defence sector. We play an important role—I am sorry; I have lost track of the rest of your question.
Viscount Chandos: It was about the direct and indirect impacts in terms of public confidence.
Dr Nicola Crauford: It is important that we look at the whole life cycle of the nuclear sector. This includes not just the new nuclear build, which everyone is keen on and interested in; we must also pay due attention to the decommissioning part, the operations and the ageing reactors that we currently have. We must also ensure that they are looked after and decommissioned appropriately; we have to try to do that decommissioning as fast and efficiently as possible, which, unfortunately, requires significant funds. I expect that the general public would have an expectation that we would be doing that.
Mike Finnerty: If I could just add to that, our approach as an enabling regulator is enshrined in the Regulators’ Code, which says that, as regulators, we must operate in a way that enables compliant businesses to grow. That is enshrined in the code, and it is how we operate. I have talked at length about our enabling approach and our fit-for-purpose approach, which will be driven forward by me as the chief nuclear inspector, to ensure that this is adopted by licensees.
The converse of that is that, when we see elements of gold-plating from duty holders—where they have gone too far and are being overly cautious in terms of systems, which has an impact on other parts of the site—we will point this out to duty holders so as to try to reduce the excessive burden that they have. We have lots of examples over the years of how we have done this but, again, for me as the chief nuclear inspector, this is an aspect that I am really going to drive forward for us; that will enable the organisations to grow.
After all, this is one of the reasons why we engage with the Government: to understand exactly what their objectives are so that we, as an enabling regulator, can operate in the best way to enable those projects to come to fruition while being done safely, in terms of them being adequate enough, meeting the regulations and not overplaying things.
Viscount Chandos: The industry may worry or allege that stuff is gold-plated. Do you think the general public worry? A breakdown of nuclear safety—a nuclear incident—looms so large in people’s minds. You could ask whether they remember Fukushima more than the global financial crisis. Therefore, if you polled the public, would they say there was any such thing as gold-plating?
Dr Nicola Crauford: I suspect that the public are going to want an assurance that we are not compromising our role and that we are providing the assurance that the sector is safe and secure. There is also an expectation on them that we do that as efficiently as possible and that we are not a constraint. It is a question of: how can we play our role and be a robust regulator, but do that efficiently?
Viscount Chandos: What are you expecting to come out of the Nuclear Regulatory Taskforce?
Dr Nicola Crauford: We have worked very closely with it. In fact, Mike and I have a meeting with the head of the Task Force this afternoon. We have provided significant evidence to it. We do not know what it will come out with. We await its findings and welcome any suggestions that it has as to how we can do our job better.
Viscount Chandos: In your interactions with the Task Force, did you sense to what extent growth was driving its focus?
Dr Nicola Crauford: I have not met with it and Mike has not done so, either. The team has met it but we have not. Certainly, the Task Force is interested in growth. But we had the impression it was interested in the entire sector, the decommissioning and the operations as well.
Q16 Viscount Trenchard: I was going to talk about the Task Force but Lord Chandos has covered that. Generally, is the Task Force looking at the public understanding of nuclear? Who is going to educate the public if we need to have nuclear facilities outside every data centre and every industrial cluster? There are many people who think that that is the direction in which we need to go. There is a massive job to do in terms of bringing the public with us to accept that. The public think at the moment there are 10 or a dozen nuclear sites across the country but if there is to be one in every town or village, how are we going to educate people to accept that? Whose responsibility is it?
Dr Nicola Crauford: I cannot answer the question in terms of what the Task Force is looking at and whether it is considering that; I do not know. In terms of acceptance of nuclear, we have a role but we are not the only party in this regard. We have a role in terms of assuring the public that future nuclear regulation is robust and we are not signing off on new designs that are not fit for purpose. But that is as far as our role would go.
Mike Finnerty: I should add to that point. If we see a situation whereby there are nuclear reactors outside every data centre or in every town, they would need to be licensed and positioned on a licensed site. The operator would need to be suitably qualified and responsible in terms of running and understanding the hazards of a nuclear site. When we speak to licensees, they recognise the need for that social licence—to engage with the public in the vicinity to explain what the hazards are, etc. We would absolutely have a role in this in terms of articulating why we would grant a licence and how we would regulate this licenced site. It would be a big endeavour if it transpired that we were to go down that route.
Viscount Trenchard: Look at France. How does it work there?
Mike Finnerty: It is similar. France has a far greater number of reactors but has a highly respected regulator, ASN, which will grant the licenses and approve designs. It will regulate the sites in many similar ways to us, although it is a prescriptive regime.
The Chair: What is your greatest concern in terms of your role for the future? Is it staffing, skills or lack of public acceptance of what you are doing, or is it funding? What is the main challenge that you are facing?
Dr Nicola Crauford: I do not think I can put that down to a single one. I think it is all of those things. In terms of our role, I mentioned the top three things that are important to us to achieve. It is about improving the efficiency of the ONR and how it operates. It is a good regulator but it is about being a better regulator and making sure that it can deliver what the UK needs in terms of the nuclear sector. All those other things that you mention are also issues for us: acceptance with the public, ensuring that it is not just about new nuclear but that we retire old plants when necessary and deal with ageing infrastructure—as well as dealing with our waste and the decommissioning as efficiently as possible. We have to look at the entire sector, and that is what we will continue to do.
Mike Finnerty: I take a similar position. This is why I highlighted the three bullet points that I did. Within this growing sector, it is about not just the amount of work that we will have but the urgency with which we will need to address it. My priorities are to make sure that we can still regulate that industry effectively so that it can remain safe and secure, while enabling the growth agenda and the ways in which that can be handled in an appropriate manner.
The Chair: Thank you very much for your time today and for the points that you have raised with us. Thank you also for coming so early in your occupancy of this particular role.
