Tories attack plans to sell off UKAEA's clean-up business

By Ed Crooks and Jean Eaglesham
Published: March 31 2009 03:00

A sell-off of the UK Atomic Energy Authority's commercial nuclear clean-up business was announced by the government yesterday, prompting Conservative accusations of a "fire sale".
The privatisation of some or all of UKAEA Limited is expected to raise about £50m for the government, and represents one of the final sales from Britain's state-owned nuclear industry.
Last night, the Tories questioned whether selling the business in the "fire sale environment" of the financial crisis would reap the maximum return for the taxpayer. "Britain needs to be building up its nuclear capabilities," said Greg Clark, the shadow energy secretary.
He expressed concern that the sale could be designed "to help the government out of a short-term cash crisis, at the expense of our long-term competitiveness".
The criticism foreshadows a wider political debate over the timing of asset sales that will come to the fore with next month's Budget.
However, the company and the government said yesterday that the reason for the sale was not the need to raise funds for the hard-pressed public finances, but the ambition to free UKAEA Ltd to compete for nuclear decommissioning work in Britain and internationally.
The revival of the nuclear industry in many countries - prompted by recent high fossil fuel prices and concerns about climate change - is creating a huge market for companies with the necessary skills.
As well as the clean-up of old nuclear sites, companies seeking to build new reactors will need to make provision for the eventual decommissioning of the facilities, creating opportunities for UKAEA Ltd in consultancy and project management.
Lady Judge, who chairs the atomic energy authority, said: "UKAEA Ltd is a decommissioning business par excellence, and it has an awful lot of work to do. But to get into the new-build business, we need a stronger financial backer."
She rejected the suggestion that the government was being pushed into a quick sale, saying the privatisation had been in preparation since 2004.
Some British companies have already expressed an interest in the business, and potential international buyers are also likely to come forward. Lady Judge said the buyer was "at least as likely to be a British company as a foreign one".
Possible buyers include the UK businesses Amec and VT Group, both of which have nuclear engineering operations. Areva of France and CH2M and URS of the US are also likely to be interested. The sale was backed last night by Prospect, the union representing nuclear engineers. The chosen buyer will not simply be the highest bidder, but the company that offers the best combination of cash and development plans for the business.
UKAEA Ltd, with a current annual turnover of £31m, is working on Britain's fourth-largest decommissioning project at Dounreay, northern Scotland.
Under European Union rules, the government cannot give financial guarantees to help it win contracts.
Simon Hughes, the Liberal Democrats' energy spokesman, called government nuclear policy "costly, risky and unnecessary". He added: "Liberal Democrats believe that we should decommission our old nuclear power stations and not recommission new ones."
Meanwhile, potential privatisations expected to be highlighted in the Budget include the Royal Mint and the Queen Elizabeth II conference centre in London. Other state-owned assets that could be earmarked for sale include British Waterways's canal-side properties.
But last year's failure to sell the Tote highlighted the relative dearth of private sector buyers in current market conditions.
Alistair Darling, the chancellor, has asked Gerry Grimstone, the chairman of Standard Life, to review the state's portfolio of 29 businesses to find ways to maximise return to the taxpayer.
The UK and atomic energy
Nuclear businesses sold off: Westinghouse, the nuclear engineer: sold to Toshiba for £2.9bn, 2006
BNFL services: sold to VT Group for up to £75m, 2007
British Energy, the nuclear generator: 36 per cent stake sold to EDF for £4.4bn, 2008
Atomic Weapons Establishment at Aldermaston: one-third stake sold to Jacobs Engineering of the US for an estimated £100m, 2008
Nuclear assets still held UKAEA Limited: up for sale, price about £50m
Nuclear Decommissioning Authority sites: auction under way
Urenco, uranium enrichment company: sale of government's one-third stake delayed indefinitely
Copyright The Financial Times Limited 2009