BNFL break-up paves way for part privatisation of nuclear group

The Government signalled the break-up of British Nuclear Fuels last night as it announced the creation of an agency to take responsibility for Britain's £40bn in civil nuclear liabilities.

The move paves the way for the part-privatisation of BNFL, shorn of its Sellafield reprocessing complex in Cumbria and the controversial mixed oxide fuel (Mox) plant. But environmental campaigners said the announcement amounted to a U-turn over the future of BNFL, which needed billions of taxpayers' money to bail it out.

Patricia Hewitt, the Secretary of State for Trade and Industry, told the Commons that all BNFL's nuclear liabilities, estimated at some £24bn, would be transferred to a Liabilities Management Agency along with the Thorp and Mox facilities at Sellafield, its 11 Magnox nuclear reactors and a uranium enrichment facility at Capenhurst, near Chester. The move to free BNFL of Sellafield followed a review of the company's liabilities that calculated they had risen by £1.9bn, giving BNFL a net asset deficit of £1.7bn and rendering it technically bankrupt.

Ms Hewitt said the move marked a "new approach" to the clean-up of the legacy left behind by early military and civil nuclear programmes.

She added that the agency would also assume responsibility for the United Kingdom Atomic Energy Authority's nuclear liabilities, which amount to £8.7bn on an undiscounted basis. She said that it remained the Government's objective to turn BNFL into a Public Private Partnership but this would not be reconsidered until 2004-05. The Government had intended to part-privatise BNFL in the previous Parliament but was forced to abandon its plans after a scandal over the falsification of safety records at Sellafield.

Mark Johnston, energy campaigner for Greenpeace, claimed the announcement meant that the planned sell-off of the whole company had now, in effect, been abandoned. "Only fragments of BNFL will now be sold and the lions' share is effectively being written off and run down. There is now no case for Sellafield continuing to operate as, by doing so, liabilities will continue to increase," he said.

Friends of the Earth's energy campaigner, Roger Higman, said the Government had demonstrated that nuclear power was "an expensive and highly dangerous liability, and that no new nuclear power plants should be built".

BNFL said its 10,000 staff at Sellafield would would continue to operate the plant. Norman Askew, the chief executive, said many of BNFL's historic liabilities predated the creation of the business and the Government's move would help management to focus on the running of the business.

Anti-nuclear campaigners said the only bits of BNFL likely to be sold off now were its UK fuel fabrication business and its Westinghouse division in the US. But a spokeswoman said it was too early to say what would be included in the sell-off.