At least 3,000 jobs are at risk because of the budget crisis at the Nuclear Decommissioning Authority (NDA), the organisation that funds the clean-up of the UK's state-owned nuclear reactors and facilities.
The NDA pays British Nuclear Group (BNG) and UKAEA to decommission their sites. But because of a £160m funding shortfall, the two companies have nine days to provide the NDA with a list of projects to scrap. These were originally due to go ahead in the financial year beginning this April.
The crisis has undermined Britain's nuclear clean-up programme. The NDA was set up 18 months ago to oversee a competitive market with companies bidding for clean-up work.
Now contractors preparing to bid for the biggest contract yet - the £5bn, five-year clean-up of the Sellafield site - are likely to demand higher profit margins. They want compensation for the risk of their work being cancelled in the future because the NDA is underfunded.
The NDA is supposed to receive £2bn each year, half from the Government and half from the income it earns from its ageing Magnox nuclear generators and its reprocessing plants at Sellafield.
But problems at the Thorp reprocessing plant, which has been closed since April 2005 because of a major leak, coupled with lower-than-expected profits from the neighbouring Mox fuel plant, have left a £450m hole in next year's budget.
The Treasury has provisionally agreed to provide an extra £290m, but this would still leave a shortfall of at least £160m. This means that many contractors that would have been hired for clean-up work, particularly for Magnox reactors that have just been decommissioned, will not be hired. Some existing contractors and BNG and UKAEA staff are likely to be laid off.
Unions representing the industry's 30,000-strong workforce - Prospect, Amicus, GMB and the T&G - wrote to Alistair Darling, the Secretary of State for Trade and Industry, last week saying they were "appalled" at the "lack of transparency and openness" shown by the NDA. Workers found out about the budget shortfall only from BNG and the media last month.
"The trade unions are at a loss as to how this government bombshell over funding has suddenly appeared, and with no consultation with lead stakeholders," the letter ended.
Mr Darling will soon meet officials from the Treasury to discuss the NDA's future funding arrangements for the three years beginning in April 2008.Reuse content