A new report by a national watchdog said concerns over project management and staffing means Sellafield is not yet achieving value for money.
The National Audit Office has published Decommissioning Sellafield: managing risks from the nuclear legacy today.
The report has found while management of major project has begun to improve, four projects underway when the office last reported in 2018 are significantly over budget and behind schedule.
It added while Sellafield has demonstrated for the first time that it can remove its most hazardous waste, progress is not quick enough.
And in 2023, Sellafield paid out £2.1m more in staff bonuses than it should have done – around £200 per person. Its senior management treated one missed target as if it had been met, and omitted another missed target from its assessment of how well the organisation had performed, so the bonus payable was not reduced.
Sellafield is the UK’s most complex and challenging nuclear site and is owned by the Nuclear Decommissioning Authority, currently responsible for operating, decommissioning and cleaning up 17 nuclear sites in the UK. Seven more sites are due to be added to its remit.
Gareth Davies, head of The National Audit Office, said: “Sellafield – and the NDA – have made progress on numerous fronts since the NAO last reported on the site in 2018.
“For the first time, Sellafield safely removed certain types of hazardous waste, including in March 2024 removing a zeolite skip, used to absorb radiation, from the First Generation Magnox Storage Pond.
“Separately, the NDA has reorganised itself to address significant contractual, delivery and procurement problems.
“Historically, it had contracted out management of nuclear sites to the private sector. The NDA began reversing this trend in 2016 – starting with Sellafield.
“From 2018-2023 it created a group subsidiary management structure, allowing it to seek savings through economies of scale and improve operational effectiveness, via sharing staff between sites.
“Tensions have existed between Sellafield, the NDA and the Office for Nuclear Regulation. Since 2023, Sellafield’s chief executive and other members of the senior leadership team have left, and there are signs – via staff survey results and willingness by new senior management to confront problems – that the organisation’s culture is improving.”
The National Audit Office said improving performance culture at Sellafield was key.
Progress not ‘quick enough’
It added that progress was not quick enough on projects on the site. It said: “Despite Sellafield demonstrating that it can safely remove the most hazardous material from ageing buildings – which poses an ‘intolerable risk’ – progress isn’t quick enough for it to be able to guarantee that facilities used to treat the waste will reach the end of their useful lives before all the waste is retrieved.
“Compared with 2018, milestones for substantially emptying three of the legacy ponds and silos have been pushed back by between six and 13 years.
“Sellafield is hoping to significantly accelerate the pace of retrievals; in the most optimistic scenario, by the mid-2030s it will be retrieving 546 boxes of waste from the Magnox Swarf Storage Silo each year – 24 times as much as it did in 2023-24.
“Separately, four of the major project the NAO last reported on in 2018 (and which had started construction), are expected to cost £1.15 billion more and be delivered 58-129 months later than previously forecast.
“Major projects started more recently are currently in line with their business cases, with one notable exception that is vital to the safe and effective running to the site. This involves Sellafield’s sample analysis facilities, which are 70 years old and in extremely poor condition.
“Work to replace Sellafield’s sample analysis facilities begun in 2016, with Sellafield deciding to convert another laboratory on the site; but work was paused more than seven years after work began and at an already incurred cost of £265m.
“A refurbishment of the existing sample analysis facility is now the preferred option, but Sellafield cannot yet confirm the viability of this decision.”
The report said £546 million of the overspend was caused by a combination of poor planning – which led to the complexity of the projects being underestimated – and poor performance by contractors – Sellafield attributed a further £43million to the cost estimates becoming more mature.
The National Audit Office said none of the budgets for these projects accounted for optimism bias. It said: “Our 2012 report recommended the NDA should require this of Sellafield, in line with the Treasury’s expectations of government projects. The NDA did not require business cases to apply optimism bias adjustments until December 2018.
“Sellafield also considers that the COVID-19 pandemic caused delays to projects and around £148 million of cost increases and attributed a further £43 million to inflation being higher than forecast.”
Recruitment concerns at Sellafield
The office said: “Recruitment concerns are hampering Sellafield’s approach to improving cyber security following the site’s prosecution for related breaches/failings earlier this year. Like other areas of the civil service, it faces an increasing threat amid the challenge of recruiting people with the skills it needs.
“Future asset management challenges arise from poor data, as Sellafield doesn’t know how long key assets will need to remain operational, nor how long they are likely to last.”
It added that Sellafield was developing a workforce plan to address issues which have affected operations in recent years.
In October 2023, the Sellafield board decided to prioritise addressing workforce capability above achieving commitments made to the Treasury at the Spending Review 2021.
The decision followed Sellafield’s safety assurance team, in 2022, expressing serious concerns about the workforce’s capability to safely operate facilities and maintain assets. The site depends upon a highly skilled workforce, and faces increasing competition from civil and military nuclear programmes.
“The NDA needs to build new facilities to treat and store different types of nuclear waste, while maintaining ageing facilities and associated infrastructure until they can be decommissioned.
“Despite progress achieved since the NAO last reported, I cannot conclude Sellafield is achieving value for money yet, as large projects are being delivered later than planned and at higher cost, alongside slower progress in reducing multiple risks.
“Continued underperformance will mean the cost of decommissioning will increase considerably, and ‘intolerable risks’ will persist for longer.”
NDA response
NDA Group CEO, David Peattie, said: “The NDA and Sellafield welcome this report, and its recognition of the progress on numerous fronts at Sellafield since the last report in 2018, including benefits achieved through the new NDA group model.
“Sellafield is one of the most complex environmental programmes in the world.
“We’re proud of our workforce and achievements being made, including the unprecedented retrieval of legacy waste from all four highest hazard facilities.
“But as the NAO rightly points out there is still more to be done.
“This includes better demonstrating we are delivering value for money and the wider significant societal and economic benefits through jobs, the supply chain, and community investments.
“With the support of our workforce, community, and stakeholders we remain committed to driving forward improved performance and continuing to deliver our nationally important mission safely, securely, and sustainably.”
Whitehaven & Workington MP’s reaction
Josh MacAlister, MP for Whitehaven & Workington, said: “This report gives us some things to celebrate and some things which the NDA needs to address as a matter of urgency.
“I echo the positive comments made about the new leadership at Sellafield. The new leadership team needs the time and space to show that they can deliver value for money.
“Workforce challenges are a clear and consistent theme and I want to see action to address this. We need a proper, long term skills plan, coupled with serious investment in our communities by the NDA so that we’re a place young people want to stay and a destination to attract new talent into west Cumbria.
“More broadly, it is staggering that Sellafield needs to go through eight approvals taking seven months for a decision around major projects. We need to speed up decision making to improve productivity, efficiency and delivery of the decommissioning mission.
“I look forward to working constructively with local partners and government to support Sellafield and the NDA to address the challenges which hinder delivery of the mission.”
