Nuclear decommissioning: How Whitehall turned toxic waste into a dirty mess

wylfa nuclear power station

Decommissioned power station at Wylfa in Anglesey

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It is possibly Whitehall’s biggest blunder. it certainly involves one of the biggest contracts ever let by government. And you will have shelled out hundreds of millions of pounds for very little in return.

The subject is the decommissioning of 10 nuclear power stations and two research centres – now all past their sell by date – and all leaving the taxpayer with an almighty bill to detoxify them and make them safe.

The total bill to do this was meant to be £3.8 billion but it turned out to do it properly would cost £6.2 billion- making it possibly one of the biggest contracts ever let by Whitehall.

And what a mess Whitehall civil servants and their ministers made of it. The whole sorry story was revealed in a report by Parliament’s financial watchdog, the National Audit Office, this month.

. The  £6.2 billion contract was approved by the Treasury because it promised to save taxpayers £904m by loading risks on the contractors. Instead it has only saved £255m and this has been partly wiped out by a botched tendering procurement which ended up with a rival consortia being able to sue the government for damages.

The company that won – an American led consortium Cavendish Fluor Partnership (CFP) based in Texas- was awarded the contract illegally.

We know this because its rivals Energy Solutions which includes Bechtel successfully sued  the government in the High Court last year and the High Court ruled that Fluor should have been disqualified because the final contract was nothing like the one put out to tender.The Business, Energy and Industrial Strategy ministry has just settled the bill with Energy Solutions by agreeing to pay then £97.3m in compensation.

But the real bill was even more. The NAO found that the full cost amounted to £122m.  It spent £13.8 million on legal and external advisers. Of this, £3.2 million was spent on the competition and £8.6 million was spent on legal fees in the ensuing litigation. The NDA estimates that in-house staff time has cost £10.8 million. This excludes the cost of staff time of senior central government officials who were heavily involved in decisions, particularly about the National Decommissioning  Authority’s settlement and its decision to terminate the contract.

One reason for this debacle is believe or not is that officials  did  not know the state of some of the decommissioned  power stations so had to revise its estimates as more problems came to light- changing the terms of the winning bidder’s contract.

Amyas Morse, head of the National Audit Office: “The NDA’s fundamental failures in the Magnox contract procurement raise serious questions about its understanding of procurement regulations; its ability to manage large, complex procurements; and why the errors detected by the High Court judgement were not identified earlier.

In light of these issues, the Department must consider whether its governance and oversight arrangements surrounding the NDA are sufficiently clear and effective in providing the scrutiny and assurance it requires to meet the standards expected in managing public money.”

There is now an inquiry going on under Steve Holliday, former chief executive of the National Grid. Its terms of reference include whether disciplinary action should be taken against the civil servants who made such a botched job and cost us even more money. It could mean heads should roll.

And it leaves the government another big problem because the contract with the present consortium has had to be terminated in 2019 – nine years before it is due to end.

And the axe is due to fall just as Brexit comes in – leaving more unfinished business just when Britain may well leave Euratom. What a mess.

I have written about this in Tribune. The full NAO report is here.

 

 

 

How you will soon be paying for Trident on your electricity bill

Whether you support or oppose Britain’s very costly renewal of the Trident nuclear deterrent  you  would expect to pay for it through general taxation.

You wouldn’t expect to have to subsidise it by paying even higher prices for essential and already expensive electricity to light and heat your home.

Yet this exactly what is going to happen following a  disclosure this month after a very short exchange between MPs and senior civil servants at a  hearing of the Commons Public Accounts Committee this month. And you won’t be seeing this spelt out in your bills.

The hearing was not into Trident but into the rapidly increasing costs and management of Britain’s first nuclear power station for decades at Hinkley Point.

But the issue was raised from a paper submitted to the committee by the Sussex University Social Science Policy Research Unit from Prof. Andy Stirling, Fellow of the Academy of Social Sciences and Dr Phil Johnstone.

Its key words were: ” an undetermined part of the full costs of this expensive, controversial – but officially highly-prioritised [3] – military infrastructure are in effect (without clear public acknowledgement or justification), being loaded into electricity prices. With costs of alternative large-scale domestic low-carbon energy resources like offshore wind power confirmed as significantly more favourable than HPC [4], it seems a hidden subsidy is being imposed on electricity consumers.”

“If a UK withdrawal from civil nuclear power on grounds of uncompetitive economics were to leave these shared costs borne entirely on the military side, then UK military nuclear infrastructures would be significantly more expensive.

“If civil nuclear commitments are being maintained (despite adverse economics) in order to help cover these shared costs, then it is this that amounts to a cross-subsidy.”

The problem was that these academics could only speculate they have no proof. Until now.

Meg Hillier, the Labour chair of the committee, without referring  to all this detail from Sussex University got an admission. She questioned Stephen Lovegrove, former Permanent Secretary, Department for Energy and Climate Change, on the issue.

This is the exchange:

“ Mr Lovegrove, there has been an argument put forward by Sussex University that Hinkley is a great opportunity to maintain our nuclear skills base. With your hat on at the Ministry of Defence, are you having discussions with the business Department about this?

Mr Lovegrove: “We are, yes. In my last year at DECC, I was in regular discussion with Jon Thompson, former Permanent Secretary at the MOD, to say that as a nation we are going into a fairly intense period of nuclear activity…. We are building the new SSBNs (nuclear armed nuclear submarines) and completing the Astutes.

…We are completing the build of the nuclear submarines which carry conventional weaponry. We have at some point to renew the warheads, so there is very definitely an opportunity here for the nation to grasp in terms of building up its nuclear skills.

“I do not think that that is going to happen by accident; it is going to require concerted Government action to make it happen. We are speaking to colleagues at BEIS ( Business, Energy and Industrial Strategy) fairly repeatedly about it, and have a number of forums in which we are doing that.”

So it is true. The two programmes ARE linked. And with  the cost of nuclear powered electricity at £92.50  per unit compared to £57 from other sources including renewable energy you are going to pay substantially more.

One company that is publicly delighted by this is Rolls Royce.  They are quoted saying : “that “expansion of a nuclear-capable skilled workforce through a civil nuclear UK programme would relieve the Ministry of Defence of the burden of developing and retaining skills and capability. This would free up valuable resources for other investments”.

Well Rolls Royce got £100m out of the submarine order and are happy for you to pay for the nuclear research. So it is more profit for them, higher bills for you.

The original article is published in Tribune magazine this week.

 

 

 

Gag, cover up and secret privatisation: What is the real story behind the NHS clinical correspondence scandal

archives

NHS archives. Pic credit: Health IT Central

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A week ago the media was full of the huge scandal of over 700,000 clinical correspondence documents – including details of sensitive patient conditions – going missing and  instead of being delivered to GPs being dumped in rooms.

The story was originally broken by the  Guardian in February this year which revealed that NHS England was secretly working on how to sort out it  without disclosing the scandal to the public. Jeremy Hunt had made a perfunctory statement to Parliament in 2016 not disclosing the full state of affairs in July 2016.

Last week the National Audit Office published a very thorough investigation into the scandal – including discovering that somehow the NHS also lost  highly confidential reports dating back to 2005 which identified children subject to child protection orders which must never be disclosed to the public without the individual’s consent. And in 1788 cases it look possible that patient treatment could have been harmed as a  result.

The mislaid and unprocessed correspondence covers GPs and now abolished Primary Care Trusts in the East Midlands, North East London and South West England .

The NHS has paid GPs £2.6m up front  to examine the mislaid documents but they have yet to complete the work so a proper picture can still not be obtained.

In one bizarre incident some 205,000 documents were kept in a room marked “ clinical notes”. The report says: “A subsequent review found that the label had been removed by an SBS general manager because “you don’t want to advertise what’s in that room”.

“ NHS SBS told us that it was important that documents were held securely and therefore not having a label on the door was appropriate as part of this.”

Now this scandal is bad enough but in the small print of the National Audit Office report there lurked another extraordinary scandal – SBS  and its auditors, BDO, decided to frustrate the National Audit Office finding out what had gone wrong.

Both the company and the auditor refused to hand over the files unless the National Audit Office signed an indemnity letter – which  could get them off the hook should enraged patients decide to sue them for their negligence.

The NAO to its credit refused to do so and in its own report says, if it had, Parliament would not have been told the full story. As the report says:

“NHS SBS and BDO felt unable to share with us their reports into the incident unless we also signed a letter (which would indemnify them). This is common practice among audit organisations.

“We declined to sign any letter that would limit our ability to report on the incident.”

Instead the NAO used its statutory powers to force NHS England, which had copies of the documents after signing the indemnity letters, to hand them over.

Now NHS Shared Business Services was set up as a joint venture with the private sector  under the Blair administration in 2004 when John ( now Lord ) Reid was health secretary. It was an equal partnership between the  Department of Health and Xansa Ltd,a British outsourcing technology company 50 per cent owned by the staff. In 2007 it was taken over by Steria, a French  rival, with British staff pocketing millions of pounds as the French paid a 70 per cent premium on the share price.

In 2014 Steria merged with another French rival Sopra creating a French owned global conglomerate. They are now planning to take over a Swedish firm

But two years before Andrew Lansley, then secretary of state for health, quietly and without any public announcement, transfered a single share to the French company, so it became the majority owner and could dictate policy. Just to make sure the Department of Health, which had civil servants on the board, declined to take up the directorships on the grounds of ” conflict of interest”.

I asked BDO and NHS Shared Business Services why they had sought to frustrate the NAO.

BDO replied putting the onus on the privatised company  saying :

“BDO was in no way obstructive or concerned about making its reports accessible to the relevant third parties.” BDO has a contractual duty of confidentiality to clients as well as an ethical duty of confidentiality under the Code of Ethics of the Institute of Chartered Accountants in England & Wales (ICAEW). Therefore, unless required by law or regulation, we cannot disclose information to third parties (such as the NAO) without the express permission of our client. 

The letters dealing with obtaining the necessary consents and agreeing the basis for access are drafted in accordance with professional guidance issued by the ICAEW. As the NAO report acknowledges in its report (paragraph 3.19), this is “common practice among audit organisations”.

 Patients of the NHS are not a party to such letters and therefore their legal rights are completely unaffected.”

NHS Business Shared Services said :

“The recent NAO report highlights a number of failings in the mail redirection service provided to NHS England. We regret this situation and have co-operated fully with the National Audit Office in its investigation. All of the correspondence backlog has now been delivered to GP surgeries for filing and NHS England has so far found no evidence of patient harm. NHS SBS no longer provides this mail redirection service.”

There appear to be contradictions in both statements.  I gather the safe delivery of clinical correspondence  is now in the hands of Capita.

 

Revealed: Thousands of Britain’s top bankers become Euro millionaires while workers pay clipped to 1 per cent

HSBC pic credit BBC

HSBC. Five senior executives due to share £33.4m Pic credit: BBC

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The day  after the general election the House of Commons library released a flood of papers which had been held up because of  purdah rules until after the result was known.

One of the most revealing papers was one on Banking Executives’ Renumeration in the UK. It drew on two sources – Britain’s submission  ( required by EU rules ) to the European Banking Authority and British sources such as company reports and details from the banks themselves about long term incentives for senior executives.

The facts revealed in the annexes to this report confirm what a lot of people have suspected but have not always been able to prove. There is-a widening gulf between the top and the bottom that has been going on during the fiercest period of austerity which has seen real wages for million falling. If John McDonnell, the shadow chancellor, and Jeremy Corbyn, the Labour leader, had access to this information during the election it could have been dynamite.

Two facts are extraordinary. This boom in higher executive pay came under the coalition between 2012 and 2015 when David Cameron and George Osborne were actively pursing wage freezes and minimal wage rises in the public sector.

Second it is the scale of it – it is not a handful of  new bankers becoming Euro millionaires, it is thousands of them.

And for the very, very top executives at five of our biggest retail banks it is untold riches if they meet performance targets.

The wider picture only came out because of a  European Commission directive to collect figures from all 28 EU members on how many bankers are earning over 1 million euro (£884,300 at current rates) a year. At the time the Euro would have been worth less – but even so it is a large sum.

Britain will no longer have to supply this when we leave the EU.

The figures show startling increases in senior staff employed by the banking industry falling into this bracket between 2012 and 2015 across nearly all sectors. Altogether the number of higher earners has risen nearly 300 per cent over this period, from 1272 to 3551.

Among the bigger rises are those in investment banking where the numbers earning this figure and more has risen from 947 to 2146. In asset management the numbers rose from 94 to 415 while those in high street banks rose from 52 to 105.

The average salary among the 2146 top earners in investment banking was 2,021,000 euro or over £1.78 million a year. Among the 415 people in asset management it was even higher at 2,201,000 euro or £1.946 million a year. In retail banking the 105 people averaged a little less at 1,789.000 euro or £1.582 million each a year.

Equally damning is a survey taken from five banks in Britain – HSBC, Barclays, Lloyds, Santander and the state owned RBS.

It looked at the money the five to eight top executives could make. At Lloyds 8 people share £24.9 a million a year between them. The figure for Barclays was £27.1m and at HSBC the top five people shared a whopping £33.4m.

Figures for the state owned RBS are lower at £11.35m while at Santander it was £10.6m.

As already known the chairmen and chief executives also get good pay packets worth millions.

What this says is that the coalition of David Cameron and Nick Clegg were happy to preside over this boom and impose severe austerity, and job cuts to pay for the mess the very same bankers created  by triggering the  crash in 2008.

As the song goes : “It’s the poor what gets the blame, It’s the rich what gets the pleasure, Isn’t it a blooming shame? ”

For not much longer I suspect given the current climate.

I have written about this in Tribune magazine. The House of Commons library report is  here for those who wish to read it

 

 

 

 

Revealed: Faked bills and dodgy deals How Assetco conned auditors and ripped off London and Lincoln’s firefighters

london fire engine

A London fire engine then owned by Assetco

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The scandal that led to the huge £3.7m  fine ( reduced to £2.4m after co-operation) against  accountants Grant Thornton and ex  partner Robert Napper is revealed in a dry 56 page report by the Financial Reporting Council.

The biggest con by the privatised company  Assetco responsible for  owning and maintaining the capital and Lincolnshire’s fire engines was in faking additional cash payments from London’s fire brigade when it was asked to do  more work.

Directors of the company took advantage of three extra requests that were approved by London fire brigade – involving new equipment for fire engines and emergency training for 700 of the capital’s firefighters.

In all three cases they fiddled the books to boost the value of the company to shareholders and lied about the cost of the contracts to  gullible auditor Robert Napper and  accountancy firm Grant Thornton.

The London fire brigade wanted its engines to be equipped with new foam pumps and thermal imaging cameras. Under the privatisation deal they could charge large sums of money per month  under a  leasing deal for fitting this equipment. But the greedy directors were not satisfied with this great deal. They decided they wanted icing on the cake and claimed even more to make their company look more profitable. And not just a few pence -literally millions of pounds.

The new foam pumps meant that Assetco could and did charge an additional £2.6m to London fire brigade. But the directors claimed that additionally they were charging London fire brigade another £46,975 a month from April 2009. This produced promised income of another £4.991 million over the next 14 years. But Assetco never even sent an invoice to the London fire brigade. for these sums. It was a complete fake – the money did  not exist and the auditors didn’t spot it.

The same applied to the thermal imaging cameras. The 140 cameras were leased to London fire brigade at a cost of £331,443 a year or £27,620 a month.  But then the directors told the auditors that it had cost over £1m to purchase and fit the cameras and that the London fire brigade was paying over £57,000 a month. This generated a total of  over £5,875m over 13 years. Again this was a complete fake and it would have shown a profit margin of 80 per cent. This went unchallenged by Mr Napper despite queries by his team.

Finally they fiddled the emergency training programme for 700 firefighters. They claimed they were receiving another £71,000 a month for ladders and hoses and guards that they were already were being paid under an existing contract.  They also fiddled the costs. They said it would only cost the company £2m to provide it over five years. In fact it was over £6m.

This catalogue of deceit was aimed at inflating the value of the company. It was particularly despicable because the directors were using the need to improve London’s  fire fighting capability as a vehicle to fiddle the books. But that was not all they were doing and I will come back to it in another blog.

 

 

 

 

 

Fined £3.5m for professional misconduct: Grant Thornton approved dishonest accounts for London and Lincolnshire’s privatised fire engines

GrantThornton

Grant Thornton: A big fine for professional misconduct Pic credit: Wikipedia

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In 2011 this blog was involved with the Fire Brigades Union in investigating the handing over of London’s and Lincolnshire’s  fire engines to a private company called Assetco.

The company nearly went bust  in 2011 owing £140m. Shareholders and banks hoping to make money from privatising the emergency services lost millions and small shareholders were ruined.

The  City Hall Tories under Brian Coleman, then  the elected chair of London’s fire authority now nowhere in public life, saw the  flagship policy as a future blueprint for privatisation. Instead it was a disaster compounded by an Old Etonian baronet buying London’s fire engines for £2  from Assetco only to go bust himself leading to another company taking over.

Now six years later the grim and unsavoury truth has come out. A report from proceedings taken by the Financial Reporting Council against the auditors of the Assetco, big accountancy firm, Grant Thornton, and the accountant who audited the company Robert Napper,  has led to a £3.7m fine for  both of them for professional misconduct. Neither Grant Thornton nor Mr Napper made any financial gain out of the scandal.

The facts are staggering. Over two years Grant Thornton   were found to have committed no fewer than TWELVE  cases of professional misconduct which meant the accounts presented to the public were mainly fictitious. Robert Napper was found to have  ELEVEN cases of professional misconduct.

As the report says: “This misconduct adversely  affected or potentially adversely affected a significant number of people in the United kingdom.”

It points out shares were trading at £6 during this period and fell to £1 in 2011 when the real situation was known. The report adds: ” The share price in 2009 (£6) reflected financial statements that contained an inflated balance sheet and included some significant revenue that was fictitious.”

An accompanying report reveals the scale of the dishonesty and cover ups. They range from fictitious payments amounting to millions of pounds from City Hall to buying up a firm for a relative  with shareholders money and creating a rental firm that let property out to directors. So extensive was the deception that I intend to use further blogs to describe in detail what happened.

As the report says: ” GT and Mr Napper were deliberately misled by AssetCo’s  management but the exercise of proper scepticism would have led to dishonesty being uncovered.”

Grant Thornton  was fined £3,500,000, reduced to £2,275,000 after  they co-operated with council and given a severe reprimand;

Mr Napper was fined  £200,000, reduced to £130,000 after  he co-operated  with the inquiry

Grant Thornton also had to pay £200,000 as a contribution to the Executive Counsel’s costs.

Mr Napper, an accountant with 23 years experience, was seen to have acted so badly that they have also recommended he be barred for three years from membership of his professional organisation ( the ICAEW –Institute of Chartered Accountants in England and Wales) for breaching  their code of ethics.

Mr Napper, from South Oxfordshire has since retired.  The Executive Counsel of the FRC said: ” The misconduct of Mr Napper , in its totality, is so damaging to the wider public and market confidence in the standards of members and in the accountancy profession and the quality of corporate reporting in the United Kingdom that removal of the member’s professional status is the appropriate outcome in order to protect the public or otherwise safeguard public interest”.

Further inquiries by me show Mr Napper in his Linked In page was publicly  endorsed by seven people including  Perry Burton, head of London audit, for Grant Thornton. and Natasha Pettiford-White, an executive assistant at Grant Thornton. Mr Burton’s recommendation would carry considerable weight as he is an auditor of 20 years experience.

Gareth Rees QC, Executive Counsel to the FRC, said:
“The Respondents have admitted widespread and significant failings in their audit work, and GT specifically has accepted there were serious failings in the execution of certain aspects of the firm’s quality control procedures. This misconduct is rightly reflected in the seriousness of the sanctions, such as the exclusion of Mr Napper from membership of the ICAEW ( the accountants professional organisation) and the fines on both Respondents.”

Matt Wrack, general secretary of the FBU, said :

“It is mystifying that central government did not spot this scandal, when the Fire Brigades Union and firefighters themselves were warning about it for years.  Leading politicians and fire service managers were responsible for allowing a gang of spivs to take over essential equipment and vehicles, the property of the people of London and Lincolnshire.  Both of the authorities for these regions need to investigate fully to ensure this never ever happens again. ”

Grant Thornton were approached and did not reply. I have written about this in Tribune magazine.

In my view this shows that one of our big accountancy firms was derelict in its duty in protecting the public from people who obviously wanted to fleece shareholders and took no care in auditing the books of people in charge of vital emergency  vehicles in London  and Lincolnshire. It also shows the real dangers of privatisation and we cannot  trust big accountancy firms to act in the public as opposed to their private commercial interests. You will see the scale of the scandal in future blogs.

 

 

 

 

 

The Treasury: Destroying Britain’s world leadership in green technology

cop 21 carbon capture

Carbon capture from Cop21

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There has been much said that Britain doesn’t capitalise on its own innovation – and leaves other countries to do so. Much of the blame is put on companies not wanting to invest – but it is often acknowledged that the state has a role to pump prime innovation.

In green technology Britain is seen to have surrendered the lead it once had on wind farms – with nearly all the technology now being imported.

What has not been really reported is the role of the Treasury in encouraging or discouraging green technology. Until now.

A report by the Commons Public Accounts Committee in the dying days of Parliament shows just how baleful the Treasury has been in destroying Britain’s world prospects coupled with writing off taxpayers money. And the main culprit in the last six years must be George Osborne and to a lesser extent, former Liberal democrat energy secretary, Chris Huhne- despite the Liberal  Democrats green image.

Officially the report was on the abandonment of carbon capture technology. –

The Commons  criticised the handling of decisions by the last coalition and Conservative governments to waste some £168m by cancelling competitions to develop new carbon capture technology before its potential could be realised.

The Mps concluded: “ The UK has now missed opportunities to be at the forefront of a growing global industry” but say this is part of the pattern where the Treasury halts projects for short term financial gain over the last decade.

“The UK may now have lost any competitive advantage to export CCS technology to countries that are seeking options to reduce their own carbon dioxide emissions, which could have created engineering and R&D jobs in this country. This is reminiscent of government decisions in the 1980s not to develop renewables, meaning the UK lost its position as the world leader in emerging technologies such as wind power.

“Neither the Department nor the Treasury evaluated the potential benefits for the UK’s economy of having a globally competitive CCS sector prior to the competition being cancelled.”

What is more damning is how MPs go on to provide a shopping list of failure to support green technology.

“These included cutting feed-in tariffs for solar and onshore wind; scrapping the zero-carbon homes regulation; withdrawing the grandfathering support policy for biomass projects; privatising the Green Investment Bank; and cutting subsidies for low-emission vehicles.”

The original decision to halt the first attempt at carbon capture technology was made by Chris Huhne when he cancelled an experiment at Longannet power station in Scotland. Then George Osborne halted for short term savings a development at Drax coal fired power station in 2015.

Mean while in the rest of the world 20 projects are going ahead. As Mps conclude:

“Halting CCS’s deployment means that the UK will have to pay billions of pounds more to meet its decarbonisation targets, has missed opportunities to be at the forefront of a growing global industry, and has damaged investors’ confidence in working with the government on CCS in the future.”

Given we are supposed to be proudly standing alone -post Brexit – and need to develop new technologies here, this is doubly damaging. But then it seems politicians are more interested in rhetoric than action.

I have written a piece in Tribune on this.