Yesterday saw one of the largest ever nuclear events in the UK with over 1,800 delegates attending the NDA Supply Chain Event in Manchester. However, amid the awards and presentations of future tender opportunities it was clear that the one issue overshadowing the decommissioning market is the coming Government Comprehensive Spending Review.
The consistent and reliable funding levels have been a feature of the decommissioning market in the last 10 years under the NDA and this has resulted in a strong and vibrant supply chain to deliver the work. However, this spending review has been heralded as the toughest yet and it comes at a time when the NDA’s commercial income is due to drop with the final closure of Wylfa, and so the NDA CEO John Clarke told the delegates in Manchester: “we will need more money from Government just to stand still”.
The Chancellor has asked all Government departments to draw up plans for 40% expenditure cuts in preparation for the review. The request does not mean that departments will end up facing cuts of 40% to their budgets, but it will show the Treasury what are the options. In DECC, its total spending outside of the NDA funding comprises less than that 40% so, if the full percentage of cuts was imposed, the department and all its functions would have to be shut down as well as making massive cuts to the NDA. We can assume that this level of cuts is unlikely but it does show that, given the drop in commercial income, the NDA budget is bound to shrink. The closure of DECC and transfer of its functions back to BIS has been rumoured but transferring functions will still not save all the money currently spent on the department.
Talk around the exhibition area in Manchester was that many in the supply chain were expecting huge cuts in funding and corresponding curtailment in supply chain activity. However, John Clarke was much more upbeat saying that he did not expect savage cuts. Given that his comments are only three weeks from the announcement of the review, we could infer that he was talking from some position of knowledge (otherwise he risks extreme embarrassment at the end of the month). This at least gives some room for optimism but it is certainly an issue we will continue to monitor.