Job losses predicted as BNFL plans to cut costs

Staff at British Nuclear Fuels, the state-owned reprocessing and contracting group, were yesterday bracing themselves for news of hundreds of job losses after the company agreed to slash its costs by a quarter over the next four years.

BNFL also said yesterday it expected to conclude negotiations to merge its operations with Magnox Electric, the nuclear generator left in public ownership after last year's privatisation of British Energy, later this autumn. But BNFL repeated that it needed assurances from Magnox and the Government that the merger would not compromise the growth prospects of its existing business.

Despite signing a memorandum of understanding earlier this year agreeing the merger, John Taylor, BNFL's chief executive, admitted the talks had taken longer than anticipated.

The merger was planned after the older Magnox stations were separated from the rest of nuclear privatisation. Magnox Electric will today reveal a substantial cut in its pounds 1.3bn of future decommissioning liabilities which are not covered by investments or guarantees from the taxpayer. Its total anticipated decommissioning liabilities were almost pounds 9bn last year.

The comments came as BNFL confirmed that the cost-cutting programme, called Beyond 2000, would involve redundancies. But the company said no figures had been suggested to staff. The restructuring would save pounds 200m, around 25 per cent of BNFL's controllable costs, by 2000-2001.

Mr Taylor explained: "We haven't set a target for job numbers yet. We're going to talk this through with the workforce. Change is always difficult to deal with but there are many people across the organisation who realise we need to change."

Unions were expecting to hear further details at a joint conference with management in December. Union officials fear the reductions could mean a drop in staff numbers of up to 25 per cent. Last year BNFL's workforce shrank by almost 500, mostly through a voluntary redundancy programme.

The company yesterday revealed a 19 per cent fall in turnover for the year to the end of March to pounds 1.26bn and a corresponding 32 per cent drop in pre-tax profits to pounds 216m. BNFL said its dividend payout to the Treasury would be halved to pounds 46m. The reductions came from the planned shutdown of the Magnox fuel reprocessing plant at Sellafield and lower- than-expected deliveries of Magnox fuel after problems at one of the generator's reactors.

Mr Taylor said the results, excluding the shutdown, had beaten targets, with savings of pounds 60m through BNFL's efficiency drive.

Despite the drop, BNFL's annual report showed Mr Taylor was paid a pounds 61,425 annual bonus last year. Coupled with pounds 65,163 of other benefits, his total pay, including pension contributions, rose to pounds 372,108.

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