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Contingent Liability Notification

My Right Honourable friend the Minister of State (Graham Stuart) has today made the following statement:

I am laying a Departmental Minute to advise that the Department for Business, Energy & Industrial Strategy (BEIS) is retrospectively notifying Parliament about contingent liabilities not previously disclosed, due to procedural errors. His Majesty’s Treasury has approved the contingent liability.

The Minute describes the contingent liabilities that the NDA has entered with two landlords, The Crown Estate and Baron Egremont, for the renewal of an uncapped indemnity in the Sellafield Replacement Sea Line (RSL) Lease.

A pipeline runs from the Sellafield Nuclear Plant site over foreshore and seabed owned by two separate third party landowners, The Crown Estate (TCE) and Baron Egremont of the Leconfield Estate (Egremont). The Replacement Sea Line (RSL) is a critical asset for the delivery of nuclear safety and the environmental performance of the Sellafield Site.

These are long standing liabilities, with the lease arrangement for the unlimited liabilities in place since 1991. This lease pre-dates the formation of NDA in 2004, following the introduction of new guidelines and status of Sellafield as part of central Government (2016) meant such indemnities now require government approval.

On this occasion, there was an unfortunate oversight: HMT approved the indemnity in February 2021, though due to a delay in commercial negotiations, the NDA did not notify the Department that the lease had been finalised in January 2022. BEIS recognises that the notification process has not been followed and is notifying parliament now.

Therefore, it was not possible to notify Parliament of the liability particulars in advance of the transaction documents being signed. The Department has noted the Committee’s concerns regarding this matter and fully accepts the need to follow the correct approvals and reporting procedures and is in the process of conducting a review into best practices.

The contingent liability’s expected risk to the Department’s available resource loss is considered very low as any nuclear liability would be covered by the Government Indemnity, with liability above £140m falling to central Government under the Paris Brussels convention. Non-nuclear liability is covered by insurance up to £100m, and above this threshold would need to be funded from the NDA and department annual budget. If the liability is called, provision for any payment will be sought through the normal Supply procedure.

If, following the laying of the departmental minute, a member signifies an objection by writing to me, I undertake to examine the objection and respond to the member concerned.

I will update the House of any further changes as necessary.