WEDNESDAY 1 JULY 1998

MR D HENDERSON

  260. On balance, do you think that matters could have been better handled by prior information being given to Parliament or do you think that you planned it right to make the announcement?
  (Mr Henderson) I am absolutely confident that we planned it the best way we could. There is always a risk of a leak on a matter like this where government officials, international officials, politicians are talking to journalists. One cannot operate on these matters on the basis that there might be a leak. If it comes, we do not like it, we have to respond to it. I am absolutely confident, bearing in mind that the main purpose was to try to minimise the chance of any terrorist knowing where the material was, when it would be moved or where it would be moved to, to minimise that, I am absolutely confident we dealt with it in the best way that was in these interests.

  261. Can you give us a clearer idea once and for all of what you see as the policy and administration responsibilities of the Foreign Office and the Department of Trade and Industry in this matter?
  (Mr Henderson) I really have to refer you to my first and second answers. The responsibility of the Foreign Office was to deal with the non-proliferation issue, was to respond to the knowledge we had late last summer about the problem and try to find out whether there was a way that we could contribute in this country to the resolution of the problem. That is our responsibility. The responsibility of the DTI, after being notified by us of the situation and of our desire that we should investigate whether or not we could contribute in a technical way, was to check whether it was possible to do that and how best it could be done. That was their main responsibility.

  262. Moreover, it was, as I understand it—I just want to underline the point so it is clear beyond doubt—the responsibility of the DTI in briefing you and perhaps your officials to ensure that it got the figures right. In so far as the figures were wrong and you said you were not over the moon about it—I think was the expression you used—that had to be remedied. May I ask in that context whether you registered the fact that you were less than over the moon directly with Mr Battle who made several references to you this morning?
  (Mr Henderson) Internal memoranda and conversations between Mr Battle and me are our business really. I can tell you that I did contact the Department of Trade and Industry at ministerial level and I indicated my desire that Parliament should be advised of the change in our knowledge of the amount of uranium that had arrived in Dounreay and that that should be done without delay and it was discussed how best to do that. It was acknowledged that it was appropriate for the DTI to do that.

  263. I fully accept that the nature of the exchanges between you and other Ministers, either within your own Department or in other Departments is a private matter to an extent. Would it be a reasonably accurate summary of your exchanges with a Minister in another Department in this particular instance to say that the exchange was full and frank?
  (Mr Henderson) Yes.

  264. I am grateful to you for that. The Department of Trade and Industry tell us that the United States' request arrived in late July 1997. Had the Foreign and Commonwealth Office been aware of the issue for some time, presumably since the January 1996 International Atomic Energy Authority visit to Tblisi, or was it a surprise? Had the Foreign and Commonwealth Office discussed the matter with the DTI? Why, given the parlous situation in Georgia, which you yourself have described, did it take almost six months before the United Kingdom agreed to take it?
  (Mr Henderson) The first thing is that you would have to ask my predecessors the nature of any discussions between the Foreign Office and the DTI before the general election. I can tell you that I was aware of this problem personally. I knew about the problem of disposing of dangerous material in the former Soviet Union. The Foreign Office has had many consultations over many years about this issue. Action has been taken by many of the governments I referred to on the second page of my memorandum. Indeed there was an attempt at an early stage in the break-up of the Soviet Union for Russia to try to do what it could to take care of dangerous materials, but there were some which could not be handled in that way and therefore the international community emerged with the responsibility of handling them in a different way, which is what all this is about. This is not the first instance of this happening as the second page of my memorandum makes clear.

  265. As far as the speed and efficiency of the decision-making process is concerned, what I am anxious to try to establish from you is whether you believe that six-month period before a decision was made was broadly acceptable or whether you think that a decision, despite all the consultation that necessarily takes place, could have been made earlier?
  (Mr Henderson) I should like to make other decisions as well much quicker than is sometimes possible. It would have been nice to have made it possible. It was necessary to have full consultation both within government departments in the United Kingdom and with our other partners, the non-proliferation treaty signatories. It was necessary for a period of time to lapse while all these consultations were taking place. It was the judgement of the Foreign Office that following the decision to take the materials on 2 February, one should work as quickly as possible to find a way of doing so. When there was an attempted assassination on President Sheverdnadze in March, that really concentrated minds on the risk of this material falling into the wrong hands in Georgia. I discussed this with President Sheverdnadze on my visit there three or four weeks ago. The Georgian Government were very grateful for the contribution not only of the British Government but the international community to try to resolve the issue as speedily as possible.

  266. Can you tell us what the financial arrangements for this are? The US had to pay for this, did they not, then we picked up the reprocessing, is that it?
  (Mr Henderson) In very general terms the financial arrangements are that the United States made a contribution, that the British Government have—I am not sure "indemnified" is the right word but the gist of it is that the British Government have—taken action to make sure that no losses are incurred by Dounreay in dealing with these materials. It may be that a small profit can be made because some of the materials, once they are reprocessed or processed have a value in the market. One of the important purposes is medical isotopes which are used in cancer treatment.

  267. You were aware when you took the decision that Dounreay did not have a licence to process that material and still does not have a licence to do so. Are you saying that you are indemnifying them for any costs necessary to bring the plant up to scratch in order to process it should SEPA give it a licence to do so?
  (Mr Henderson) One has to put these things in proportion. Dounreay has had problems recently which we are aware of. One looks to them being resolved as quickly as possible. There is no question of Dounreay being re-equipped on the basis of a multi-million pound subsidy to deal with this small amount of uranium. The figures we were talking about are difficult to predict but they are not greatly outside a £50,000 limit either way. I do not want to be held to these figures, but it is of that order; it is not millions.

  268. Your memorandum states, "The UK is not currently involved in any of the G8 projects for dealing with ex-weapons material". Could you explain to the Committee why not? Could we not be doing more to help, or would that involve a commitment to MOx production?
  (Mr Henderson) We are always willing to share the burden, to show a lead, to set an example in these matters. That is why we took the action we did in this instance. If other situations arose, as I said in my response to Mr Hoyle's question, then we would need to look at whether or not there was a contribution which we could make. There is no question of Britain making a disproportionate contribution over the medium and the long term. There are international obligations which all the signatories to the treaties have and they must be honoured.

  269. Is this the first help that we have given?
  (Mr Henderson) We have been involved in consultation before on many occasions on what the options are for various parts of the former Soviet Union in dealing with materials. We have actually contributed to research projects and I can give you some detail on that. There have been international contributions from governments to physical protection upgrades for protection of nuclear materials in newly independent states. Britain has made a US$680,000 contribution spread over three years. In 1997 contributions from governments to an international physical protection advisory service to Eastern Europe: the United States committed US$827,000, Germany US$200,000, Japan US$22,000, Britain US$20,000. Britain's expenditure was for training plus resources in the form of a UK expert for the five missions carried out so far. A lot of advice has been given on dealing with some of these matters.

  270. Given that previous involvement, I am not entirely clear why it is that we are not currently involved in a similar way with any of the current G8 projects.
  (Mr Henderson) We are involved. This is a G8 project.

  271. It is a question of what "involvement" means, is it not? Involvement can obviously mean removing nuclear material from one part of the globe and depositing it elsewhere, actually being physically involved in that activity. Just to clarify, so there is no misunderstanding, is it the case that until now we have taken no material before the Georgian?
  (Mr Henderson) We have taken no material before the Georgian on the basis that the Georgian material was taken. There are commercial movements quite regularly but the rules there are different in that the reprocessed material has to be returned to the country from whence it came.

  272. Neither under the present Government, nor under the previous Government have we taken material on a similar basis.
  (Mr Henderson) Not on the same political basis. You should address the question to the Department of Trade and Industry if it is a non-political basis.

  273. I do appreciate that. Thank you.
  (Mr Henderson) I will submit the paper to the Committee.

  274. May I refer you back to the first two responses you made? If you had been aware that the material which was being received at Dounreay was a combination of highly enriched uranium and other material, would your view and the view of the Foreign Office have been the same?
  (Mr Henderson) My view would have been the same. I have not explored that hypothetical position with others, but my view would have been the same.

  275. Since the receipt of the material at Dounreay there has been the incident at Dounreay which led to a complete severing, for a variety of reasons, of the power supply to the fuel cycle area. If, following that incident, you were perhaps today in the position of deciding or determining whether it would be a reasonable or an appropriate location for that material to arrive, would your view have been the same? Following on from that, clearly a decision was taken in June not to seek any further commercial work for Dounreay. In the light of those two things, one the unfortunate incident, second the decision not to take any commercial work, would your view have still been the same, to take the material?
  (Mr Henderson) Politically I would have said to the DTI that I think there is a strong case for us being able to handle this material and receive the material in the United Kingdom and process it or reprocess it. I would have asked the Department of Trade and Industry whether we had that capacity. If they gave me the answer that we did not have that capacity and that there was no alternative, I would have to draw different conclusions. If I was given an answer that there was an alternative way of dealing with this, then having explored it, assessed it and made a judgement on its viability, I would have then come to a decision. I would have wanted to have made the same decision if it were technically possible.

  276. At the time the decision was taken, even within the Foreign Office there was extant, though not in the public domain, the nuclear installation inspectorate's report by Mr Baxter on the safety issues in the fuel cycle area at Dounreay. I think you said, if the DTI had said that this material could not be reprocessed at Dounreay. Did you seek any reassurances or enquire at all about the safety situation at Dounreay or did you assume that was simply a matter for the DTI to deal with? Did you ask them specifically whether the material could be reprocessed as clearly it could not be reprocessed and still cannot be reprocessed because there is no reprocessing licence. Did they actually say yes, it can be reprocessed?
  (Mr Henderson) We asked the DTI whether they could deal with this material and they said yes.

  277. Deal with.
  (Mr Henderson) Process it or reprocess it, depending whether it is fresh fuel or spent fuel.

  278. Indeed, but that is not now the case. It cannot.
  (Mr Henderson) We have to draw a distinction between a plant not being able ever again to undertake a facility and a plant having short term difficulties which need attending to and then giving it the capability of undertaking its normal work. We have to draw that clear distinction.

  279. I am trying to explore to what extent the independent agencies like SEPA, who are responsible for issuing a licence for reprocessing, may be put under pressure by Government decisions which clearly rest on that licence being granted.
  (Mr Henderson) I have every confidence that the agencies which are responsible for checking the safety and dishing out licences will do that in an objective way which protects public interests and would not be swayed by any Government pressure.

  280. Can you tell us whether there was any other place in the world, apart from the UK, where this work could have been done? Was this a consideration in Britain's willingness to undertake the responsibilities?
  (Mr Henderson) It could not have been undertaken in the United States because there is a United States law which prevents spent fuel being processed and retained in the United States. It would have required an environmental impact survey, it would have required the agreement of the congressional representatives in the area and that would have been a time-consuming business. Russia can no longer take it because the Duma passed a law in 1991 saying that fuels which were reprocessed had to be returned to their original location. The French were not able with their legislation to take fuel in this instance. We were the only country which was able, without changing the legislative framework, to take the materials. We have no intention of making a habit of this. This is an exceptional case. In the particular circumstances it was felt very important that we responded to that challenge. From my visit to Georgia three or four weeks ago, I am absolutely clear in my mind that with the problems which exist in Georgia, strategic importance, the war in Abkhazia, that we very much made the right decision and that is welcomed by the Georgian Government.

  281. Can I get it right then? There is nowhere else in the world, apart from the UK, where there is no law on return of waste and therefore we ended up having to take it because we do not have a law. Do you think in retrospect you wish we had passed the law?
  (Mr Henderson) No, I think consideration can be given to that matter in the future. The advantage of the present situation is that it allows a flexibility, it allows the unusual situation to be met and our important role in dealing with this problem is recognised in the international community and it may be that other countries are now looking at whether their laws are appropriate and whether it gives them the flexibility to meet unforeseen political situations. I think one has to be very careful about shutting every door on this. On the other hand oneMr Henderson) Yes.

  283. Do you think that these responsibilities should be more clearly expressed? Do you think it would be desirable to have it in legislative form rather than the kind of vague wording of a White Paper?
  (Mr Henderson) I would want to reflect on that but politically we have to be able to make a contribution to non-proliferation. It is an area where we do have expertise. We have to face up to our international obligations, over the medium and long term not to take a disproportionate share but to take a fair share.

  284. What is a fair share when other people are not taking any at all because they are not allowed to?
  (Mr Henderson) They are actually taking it in other ways. The American Government for instance took 600 kgs from Kazakhstan but it was fresh fuel and their legislation allowed them to do that. That was a major contribution to the international effort.

  285. They were able to use it to make their own nuclear devices if they saw fit.
  (Mr Henderson) They would be able to use that fresh fuel for a number of different purposes. If they felt they were able to do that by making Kazakhastan a safer place and also turn that fresh fuel into purposes for which it could be used commercially, then they thought that was a decision they should reach, but that is a matter for them.

  286. Would it be fair to say that it is the irradiated fuel which people tend to get more exercised about? Are we saying that Britain is really the only place which can take that now?
  (Mr Henderson) Without specific legislative approval.

  287. Given your knowledge of the foreign situation, are there not possibilities that this situation may not arise in the future? I am thinking of the situation in India and Pakistan which obviously we hope could come to a conclusion and there are other similar areas.

  (Mr Henderson) Politically if it does arise again we have to meet that challenge and find a way of making the world a safer place by securing these materials in the best and most appropriate way.

  Chairman: On that note we have completed our questions. We should like to thank you for your evidence. There may be one or two points of detail on which we should like to come back to you and we will be in touch with you if appropriate. Thank you very much for coming and thank you very much for your help.