35. This section presents a summary of the key findings from the audit. The findings have been drawn from the results of our confidential interviews with a large number of staff within BEGL and BEG(UK)L and in key contractors; over 250 people in total. We were afforded unfettered access to talk to staff. Their co-operation and openness greatly facilitated the work of the NII team, and contributed to the success of the audit.
36. The findings are focused on the areas for action to ensure the capability of BEGL and BEG(UK)L to discharge their responsibilities as Licensees is maintained or improved. However, good practices we found or confirmed during the audit are also noted. These have been taken into consideration in deciding the regulatory action which needs to be taken, as discussed in the Conclusions (paragraph 77). It is important that the Licensees maintain and build upon these areas of good practice.
37. The principal organisational structures of both Licenses have not changed fundamentally from what was in place at the time of privatisation in 1996. For example, both Licensees have maintained Health, Safety and Environment Divisions that are independent from the Engineering Divisions which produce technical work and safety cases. These organisational structures can be considered as 'tried and tested'.
38. Staff at all levels were committed to safe operation of the nuclear facilities; indeed the statement that 'safety is non negotiable' was put to us in many ways in the various interviews. This is an attitude that we had expected to find in the staff of nuclear Licensees. To back this up, we were given examples of situations where commercially advantageous work was being delayed to allow completion of safety related projects, and we found no indications that safety related issues were being suppressed.
39. The experienced staff we interviewed were of a uniformly high standard, technically proficient in their fields, and professional in their approach. They were of the expected calibre and are one of the Licensees' essential strengths.
40. The Directors and senior managers indicated they were aware of the potential pitfalls that downsizing can introduce. In particular, Directors confirmed they were aware of the problems encountered in nuclear companies elsewhere that have undergone downsizing. Directors also told us they recognised that the Licensees were the holders of a special technology and would ensure that no contractor would know more about an area than the Licensees.
41. The majority of managers had in place all the measures available to them to mitigate adverse impacts of the downsizing exercise. For example, in BEGL a management decision was taken to disseminate specialised graphite expertise to more than the one remaining expert. Other examples are the retention of the world class expertise in structural integrity methodology, the development of experience sharing programmes, and training programmes aimed at achieving professional recognition in new recruits and maintaining technical and managerial competence of more experienced staff. There is also a policy of bringing in new graduates to renew and refresh the technical core of the company.
42. The initial targets set for downsizing had, in some areas, been revised when managers had made cases to limit the reduction in staff numbers. Managers had also taken other steps to maintain threatened capabilities within the Licensees - for example by bringing research work in-house and holding internal technical groups at the minimum critical number to ensure functional expertise was not lost.
43. We found groups within the Licensees who consider that the downsizing has produced a better focus on both commercial and safety work, and improved their efficiency and effectiveness. They highlighted improved co-ordination on outage work (due to better definition of roles and responsibilities) and a reduction in the number of different technical groups involved in decision making.
44. We were encouraged by the development of policies on mental health of staff. In some Divisions, these have been translated into guidance on overtime. Senior managers were clearly aware of the potential problems of excessive overtime. It was also recognised at senior level that the staff need more 'time to think', an important factor particularly in specialist technical areas. We were told that there will be a period of stability, without large scale changes, once the current downsizing processes (Vision 2000 and Route 21) have been completed.
45. We found other noteworthy examples of good practices within different areas in the two Licensees. In BEG(UK)L, there is a formal register of Suitably Qualified and Experienced Personnel (SQEPs) - this will provide the basis for identifying and maintaining the requisite skills base within the Licensee. BEG(UK)L makes effective use of Technical Development Committees as a vehicle for co-ordinating work and linking between the centre and the stations. In BEGL there is a general philosophy to retain in-house technical specialists, rather than rely more upon generalists, which accords with the intelligent customer requirement placed upon Licensees.
46. Both Licensees expressed their desire to achieve world class standards, which is a laudable aim. The senior management are committed to improving all round performance in striving towards this aim.
47. This brief overview picture identifies many of the characteristics we expect to find in the management and staff of nuclear Licensees. Further examples of good practices are provided in Appendix 2.
48. The audit has revealed a number of areas where the Licensees need to take action to address problems or concerns. The key issues are discussed in this section, against each Licensee. The specific recommendations arising from the audit are set out in Appendix 3.
49. A key factor in the Vision 2000 downsizing process was a predicted reduction in workload - 'doing less, with less'- which overall has not transpired. Nevertheless staffing levels have been reduced. Shortfalls in resource have been made up by employing additional contract staff, some of whom are ex-BEGL staff recently released on voluntary severance terms. In some of the key safety areas this has resulted in the work load on BEGL staff increasing, since they now have to deal with the safety issues plus supervision of contract staff.
50. We found that systems for work recording do not accurately reflect the number of hours being worked by staff. Our interviews with staff at different levels within BEGL revealed that some are working significant amounts of overtime or unpaid excess hours to keep abreast of the workload. Excessive and persistent demands upon the staff carry the potential for degradation of the quality of the product. Whilst BEGL recognise there is under-reporting of hours worked, which goes against company policy, it is not clear that it can gauge the extent of the problem. Further effort is required to match work loads with staffing levels and to ensure that there is an accurate measure of the hours staff are working (whether paid or not).
51. The inability to reliably predict the forward work load, as evidenced by the failure to achieve the 'doing less' (ie work reduction) prerequisite for Vision 2000, has clear implications for any future decisions on staff downsizing. When combined with the uncertainty over the actual numbers of hours being worked by staff, this emphasises the need for BEGL to ensure there is a firm foundation upon which to base its forward plans and staffing levels.
52. We had expected to find that BEGL had a clear definition of the skills base it needs to retain to enable it to discharge the responsibilities of a Licensee. Regardless of the impetus to downsize, BEGL cannot delegate these responsibilities to any other organisation. BEGL needs to maintain expertise within its own staff. We did not find a clear definition of the requisite skills base. The downsizing process has thus been taking place without knowing the overall limit - the minimum necessary skills base. BEGL needs to expedite the provision of a clear and accurate baseline for the range and depth of expertise it needs to retain as a Licensee. This needs to be combined with effective, long term succession planning to maintain and develop its technical expertise in nuclear matters over the lifetime of its nuclear facilities including decommissioning.
53. Downsizing has resulted in knowledge and expertise in some technical areas specific to the nuclear industry being vested in individuals (singleton experts) within BEGL. This leaves BEGL particularly vulnerable to loss of expertise - for example if such staff leave to pursue their careers elsewhere (as has happened). BEGL has found it difficult to find replacements with the necessary expertise and nuclear experience. BEGL cannot rely upon a policy that it will always be possible to buy in specialist nuclear expertise from the labour market. This needs to be taken into account when setting the baseline for the in house skills base (with some element of 'defence-in-depth'). During the audit we identified areas where we consider BEGL needs to increase staffing levels to counter vulnerabilities such as singleton expertise or over reliance upon contractors.
54. BEGL has a variety of relationships with contracting organisations, from the employment of individuals from agencies, through standard contracts for specific pieces of work, to longer term partnership arrangements. However, BEGL does not have a formal policy setting down why, when and how to use contractor support (taking into account its responsibilities as a Licensee). We believe the lack of such a policy, combined with the lack of a clear baseline for the in house skill levels, has led to the situation where the present staffing levels in some areas in BEGL need to be increased (as above). BEGL needs to clearly define, and apply, an appropriate policy governing the use of contractors.
55. BEGL is developing closer relationships with key contractors - known as partners. In most cases, the partner organisations are well established in the nuclear field and undoubtedly can provide both expertise and experience. Nevertheless, regardless of the close relationships with BEGL, the partners must still be seen as contractors and BEGL cannot delegate any of its responsibilities as a Licensee under such arrangements. The use of partnerships is not ruled out in principle, however it raises issues such as loss of the Licensee's corporate knowledge and expertise, reduction in opportunities for technical development of Licensee staff, and ultimately the potential for loss of control and ownership of safety cases by the Licensee. In pursuing and developing partnerships (and in any other arrangements with external bodies), BEGL must ensure it retains the necessary range and depth of in house expertise to be able to subject work or advice received from external sources to informed and critical review before acting on it. Based on the audit findings, we believe the relationship between the BEGL and its partners needs to be reviewed as part of the development of an overall policy on the use of contractors.
56. Given the extent to which BEGL utilises contractors and partners, we had expected to find the concept of 'intelligent customer' and the requirements of the role to be well defined. However, we found only one manager who had anything formally written down on the role. BEGL needs to promulgate a company-wide policy on the intelligent customer role and requirements. Appendix 1 sets out the basis on which the intelligent customer capability was evaluated by the NII audit team.
57. During the audit, we focused on the outcome from BEGL's downsizing and management of change process rather than the process itself (which had been considered in previous inspections). However, some aspects of the execution of the management of change process did come under review. Based on past understanding, we expected that specific pre-conditions (enablers) would have to be satisfied before the person was released on voluntary severance, to ensure the organisation would be able to cope without that individual. Key amongst these enablers was a reduction in work, or establishing that a role was no longer required. In exceptional situations, we were aware that compensating measures such as work deferral, reallocation of responsibilities, deferring severance dates, or filling gaps with contractors would be deployed.
58. We found that these compensating measures have tended to become the norm, which explains how staff have been released under the management of change process without the concomitant reduction in work load. The process has also been misused in that some enablers have been met by means of changing pre-conditions to ongoing (open ended) commitments, which are not then always met before someone is released - for example, a requirement to 'provide a trained replacement before release' becomes simply 'provide training'. The small sample of records that we checked did not provide confidence that the principles of the process had been honoured and the procedure followed rigorously. In our view a management of change process which can reduce a scarce resource down to a single person must, in any case, be open to question. BEGL needs to carefully review its management of change process to address these shortfalls.
59. Under the downsizing (Route 21) process, the planned work load within BEG(UK)L has reduced, although the reduction does not quite meet the prediction. The management of change process in BEG(UK)L required staff to be retained in post until the work had actually reduced and we found this requirement had been honoured. However the amount of emergent work has been substantially underestimated and in some areas individual work loads are high.
60. Some staff are working significant amounts of overtime or unpaid excess hours. We also found that there is under-reporting of hours worked. The downsizing decisions are suspect when the forward work load cannot be accurately foreseen, even over reasonably short periods (2 or 3 years), and the amount of effort being applied with the present staffing levels has not been accurately determined. BEG(UK)L therefore needs to ensure that it has a sound basis for establishing its staffing levels needed to meet current and future requirements.
61. The register of Suitably Qualified and Experienced People (SQEPs) provides the means for establishing and maintaining the requisite skills base within BEG(UK)L. However, we found that in some technical areas there are no BEG(UK)L staff on the SQEP register, only contractors. We also found areas covered only by singleton BEG(UK)L experts, albeit backed in most cases by SQEP staff from the contractor support, and in at least one case there is a gap in the SQEP coverage (ie no cover by either Licensee or contractor staff). BEG(UK)L told us its formal objective is to have all SQEP posts covered by two staff, at least one of which is a BEG(UK)L employee. It needs to expedite the necessary action to meet this objective - this should be viewed as a minimum requirement but it would still leave BEG(UK)L vulnerable to loss of key specialist staff. In addition, BEG(UK)L needs to establish a clear baseline for the range and depth of expertise it needs to retain as a Licensee. This needs to be combined with effective, long term succession planning to ensure its technical expertise in nuclear matters is maintained throughout the full lifetime of the nuclear stations, including decommissioning.
62. When we examined the process for placing staff on the SQEP register, we found that practice varied in different sections of the organisation. We had expected to find specific criteria for each SQEP topic area, combined with requirements for refresher training. There should also be criteria covering removal from the register - for example, if individuals do not actively practice in an area of work for a given period the SQEP register entry should lapse. Overall, none of the sections in BEG(UK)L had all the criteria which we had expected to find. The SQEP register is a good concept but implementation of the concept needs further consideration and development.
63. Since its formation, BEG(UK)L (formerly Scottish Nuclear) has had a close relationship with external organisations which possess relevant expertise. These organisations are contracted to provide technical expertise, but under 'satellite office' arrangements whereby BEG(UK)L is able to nominate specific individuals to work on the contracts. These individuals meet the BEG(UK)L SQEP requirements and are included on the SQEP register. There are clearly potential advantages in such an arrangement, not least in ensuring the quality and consistency of the technical support. However, we found that in some areas BEG(UK)L is now over-reliant upon this support. Overall, downsizing has resulted in a greater proportion of contractors filling SQEP roles, combined with an increase in the number of contractor staff on the SQEP register. This situation erodes the ability of the Licensee to demonstrate that it is in control through its own staff. BEG(UK)L needs to redress the balance, taking into consideration what is required within the Licensee.
64. BEG(UK)L does not have a formal policy on the use of contractors, nor on its 'intelligent customer' role. The lack of such policies, combined with the lack of a clear baseline for the in-house competence requirements, have no doubt been significant factors which have led to the present situation. BEG(UK)L needs to adopt a clear policy on the use of contractors, together with its intelligent customer role and requirements, which take into account the limitations on the extent that reliance can be placed upon contractors due to BEG(UK)L's responsibilities as a Licensee.
65. The management of change process within BEG(UK)L was not targeted specifically during the audit. Previous inspections by NII had looked at the process itself; the focus this time was on the outcome from the process. However some aspects of the process did come under review. Our interviews revealed a similar picture to BEGL in that we found enablers requiring pre-conditions to be met had been relaxed to ongoing commitments. Also, as with BEGL, the process has led to singleton experts (or none at all) in some areas - notwithstanding BEG(UK)L's efforts to reduce the areas of singleton coverage. BEG(UK)L needs to carefully review its management of change process to resolve these problems.
66. As discussed in Section 1, British Energy has put forward proposals to integrate the technical management and resources of the two Licensees, BEGL and BEG(UK)L. We have not yet agreed to these proposals and the potential impact of integration was one of the areas we explored during the audit.
67. We consider that all staff require a clear understanding of their revised responsibilities, changes in methods of work, and any additions to their workload before integration goes ahead. This is to ensure that there is a seamless transition into the integrated organisation with no diminution of standards of work or loss of control of the Licensees' operations. We found that, although the proposed structure of the integrated organisation has been defined and the managers for the joint team have been selected, few of the staff below senior level seem to know what additional responsibilities they might have to undertake following integration. We were also told that there is no explicit allowance within most work programmes to cater for the extra demands of integration - which will include additional travel between the two central offices at Barnwood (Gloucester) and Peel Park (East Kilbride). These demands will be over and above the normal workload, which is already high in many areas. We wish to be reassured that the two Licensees are ready to integrate. BEGL and BEG(UK)L therefore need to clearly define their state of readiness for integration and demonstrate that adequate control of operations can be maintained in both Licensees.
68. The integration proposals put forward by British Energy are novel and raise a potential problem which we had not previously considered in detail. The crux of the issue is additional responsibility placed on managers, the additional workload and hence their ability to adequately control and supervise safety related activity. Additionally, there is the question of the acceptability, in nuclear licensing terms, of individuals in the central (integrated) team who work for one Licensee (eg BEGL) providing advice to the operating stations in the other Licensee. Each Licensee is expected to maintain control of its own operations and have its own intelligent customer capability. The arrangement proposed by British Energy could violate these principles. Some common functions already exist between the two Licensees - notably civil engineering and electrical engineering expertise - and the audit has raised questions in these areas. Whilst these specific changes were not deemed unacceptable by NII in the past, the current proposals for integration on a much broader scale have caused us to look closely at the wider licensing implications. Resolution of these issues will be necessary before our agreement to the deferred integration proposals can be considered.
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