Research and analysis

Review of progress against recommendations in Post Implementation Review of Part 3 of the Energy Act 2013

Published 4 October 2024

Introduction

This report is a review of progress on the delivery of the recommendations made in the Post Implementation Review (PIR) of the Office for Nuclear Regulation (ONR), published in July 2022.  This progress review has been led by DESNZ, in close conjunction with DWP and ONR, and reflects the considerable work ONR has undertaken towards the recommendations over the last two years, notably during a period of considerable change and increasing pace across civil and defence nuclear in the UK.

ONR is the UK’s independent nuclear regulator for safety, security, and safeguards, with the mission of protecting society by securing safe nuclear operations across the UK.  The 2022 review was commissioned by government and conducted by an independent reviewer, under Part 3 of the Energy Act 2013, which established ONR in 2014. The review considered ONR’s effectiveness as a regulator and whether it was fit for the future.

The review reported in July 2022 and endorsed ONR’s effectiveness as a regulator and readiness to regulate new nuclear and made recommendations to support the ongoing improvement of the regulator’s approach to innovation, enabling regulation and targeted interventions.

Aims and scope of progress review

The 2022 review was a statutory review, under Section 118 of the Energy Act 2013, for the Secretary of State to conduct a post implementation review of provisions of Part 3, to provide assurance and challenge on whether the objectives of the Act were being met.  This report is not a statutory review, but a formal review of progress that was requested in the original report, to be published 24 months later, by July 2024.

This report describes the types of activities ONR has already undertaken in response to each recommendation in the original report, and where they have future work planned to go further. It looks at ONR practices against the recommendations within the thematic structure of the 2022 report but is not a wider review of ONR’s effectiveness.  That is out of scope and has been addressed through other processes, e.g. the recent Integrated Regulatory Review Service (IRRS) mission.

The Post Implementation Review also made multiple suggestions for ONR to implement, in addition to the main recommendations.  Whilst not the focus of this report, we have provided an overview of ONR’s progress against these.

Methodology

This review of progress report has been built on two years of collaboration between ONR and DESNZ and DWP (the Government Departments responsible for the policy and sponsorship of the ONR, respectively) to monitor progress and implement recommendations.  The Implementation Delivery Working Group, made up of DESNZ, DWP and ONR officials has met on a regular basis over the last two years to track and to provide a steer on evidence required for the PIR recommendations to be closed.  The Nuclear Innovation and Research Office (NIRO) has provided independent advice to DESNZ on the suitability of evidence throughout this process.

The Implementation Delivery Working Group has fed its recommendations for closure into the Quarterly Accountability Review (QAR) meeting, made up of senior ONR, DESNZ, DWP and MOD officials.  QAR has then provided critical oversight to assess whether actions taken achieve the intended outcomes and collectively agreed where recommendations are complete.

Conclusions

ONR has made significant progress against the 19 recommendations in the Post Implementation Review and all recommendations can now be closed. It is clear to see from the breadth of activity that ONR has continued to develop and mature as an organisation over the last two years.  ONR has delivered progress in each area to meet and close recommendations, and in nearly every area, has a programme of work going forward to ensure that the essence of the recommendation is maintained in ONR’s business.

ONR has demonstrated, through the extensive evidence in this report, that it is invested in implementing key changes to improve its sense of purpose, and its functions, governance, accountability, efficacy, and efficiency.   In all cases, ONR has completed activity to drive forward recommendations and close them. For example, ONR has taken steps to evolve to support future nuclear development and innovation.  ONR launched a successful pilot of a nuclear regulatory sandbox process, using the regulation of artificial intelligence (AI) within the nuclear industry as the test case, via its Innovation Hub, thereby encouraging the nuclear industry and its supply chain to adopt innovation solutions.   ONR has also taken significant action to streamline the Generic Design Assessment process in recent years, and as documented in the previous Government’s Civil Nuclear Roadmap, published in January 2024, committed to further streamlining.

In other areas of interest to government, ONR has made significant progress to meet the recommendations where government shall maintain a keen interest. For example, it is right that ONR continues to consider the economic impact of its regulation, both in terms of proportionate decision making and efficient working. We also support ONR’s commitment to continuous improvement in addressing consistency and proportionality challenges by continuing to encourage dialogue between duty holders and inspectors. And as ONR approaches a period of change, with the bedding down of the outcomes of the recent organisational review, a new permanent Chair next year, a new CEO/Chief Inspector by Autumn 2025, it is important for ONR to continue to keep its resilience under review.

Next steps

The QAR will continue to monitor progress over the next year, to ensure that outstanding actions for ONR referred to in the report and the good work already undertaken is fully embedded. DESNZ will take forward the outcome of recommendation 8 on alternative charging arrangements to support consideration of the future funding of ONR, subject to spending review, business case approvals and value for money assessments.

Status of recommendations table

Ref	Title	Status
01a	Cost to industry/NERA report	Closed
01b	Consistency and proportionality	Closed
01c	Environment of constructive challenge	Closed
02	Consistency and proportionality – Stakeholder Survey	Closed
03	Organisational efficiency	Closed
04	Resilience of new senior structure	Closed
05a	Board – paperwork efficiency	Closed
05b	Change management efficiency	Closed
06a	Risk management training	Closed
06b	Risk appetite communication	Closed
06c	Risk maturity analysis	Closed
07	Financial management and forecasting	Closed
08	Scoping alternative charging arrangements	Closed
09	WIReD external review	Closed
10	Board – C-suite IT specialist	Closed
11	Innovation hub	Closed
12	External communication of innovation	Closed
13	Benchmarking GDA	Closed
14	Innovation secondments	Closed

Form, function, vires

There were no recommendations made under this theme in the PIR report. However, there were a small number of suggestions.

ONR’s progress update on suggestions:

• ONR notes that its plans to deliver NIM3 have been replaced with other work.
• ONR has continued to proactively engage with DESNZ and ECJU in identifying and addressing export licencing requirements.

Governance and accountability

Overview

The PIR report noted that ONR’s governance structure changed following its evolution from an agency within HSE to an independent public corporation, including the successful transition to a new single joint Chief Executive and Chief Nuclear Inspector role.  However, there were some concerns noted on whether the joint role had sufficient resilience to withstand increased demands due to significant external factors.

Chair and Chief Executive

Recommendation 4:

ONR’s Board is continuing to review the impact of recent organisational changes. In doing so, we recommend the Board consider, by the end of 2022, the resilience of the new structure (and certain roles) against sudden or prolonged, internal or external events that could impact business continuity, and the timely realisation of ongoing projects. ONR should make suggestions for further improvements and share the findings openly with both DESNZ and DWP.

ONR has demonstrated that their changes to its organisational structure in 2022 brought the organisation closer together and DESNZ can see evidence to show that resilience and succession planning is starting to be embedded:

• Mark Foy became CE/CNI in June 2021 and at the same time ONR’s new ONR Executive Team (OET) was formed becoming ONR’s strategic decision-making body, streamlining and strengthening corporate decision making
• the ONR Board reviewed succession planning arrangements for the new structure and wider leadership roles in October 2021. This was supported by discussions at the Remuneration and Resilience Committee in July 2021.
• the PIR and new leadership arrangements were undertaken at a time when ONR was sustaining a prolonged deployment of its incident management response because of the Covid-19 pandemic, which demonstrated the robustness and continuity of ONR’s leadership during a challenging period. An extensive lessons learned exercise was undertaken subsequent to the pandemic, with the learning channelled into ONR’s Incident Response and Recovery Framework. The Framework sets out the roles and responsibilities for senior leaders during sudden or prolonged, internal or external events. It has been designed to provide maximum flexibility and resilience when responding to disruptive events, and has been tested during tabletop exercises and a real event; prolonged building evacuation at its Bootle headquarters due to a gas leak.
• Resilience and succession planning across the organisation is considered regularly by ONR’s Remuneration and Resilience Committee (RRC). Each year an assessment report on the resilience and succession for key business roles is presented to and discussed by the committee. In turn, this is reported to the ONR Board, to provide assurance on the continued resilience of the organisation. The Board is assured of the process to support succession planning and wider talent management to ensure resilience across the organisation. BEIS (now DESNZ) and DWP attended one Board session where the approach and issues / mitigations were discussed openly.
• The ONR Board and Audit and Risk Assurance Committee (ARAC) review strategic risks associated with capability and capacity and as part of the budget for 22-23, the board approved contingent recruitment (recruiting ahead of staff leaving due to retirement) but this was not implemented because of efficiencies that were subsequently identified.
• Resilience in the director cadre below Chief Executive level has improved significantly since the PIR report. Following a recent Director of Regulation appointment, ONR established a reserve list of successful candidates. This, along with several credible applicants demonstrates strength in depth, which will allow ONR to swiftly address any emerging gaps in Director level leadership in the future.
• The approach to resilience and succession planning at Director and Band 1 level has been reinforced by enhancing formal leadership training and other development opportunities for current and potential future leaders.
• That this strategy has been successful in increasing ONR’s talent pool has been demonstrated by recent senior leadership appointments which have been from across all 5 statutory purposes. Historically, senior leadership roles have been held by nuclear safety inspectors.
• ONR’s long term strategy to grow talent from has meant that it has managed a number of losses from its senior leadership team within both its regulatory and corporate service functions over the past year.  Experienced colleagues have successfully stepped up, ensuring ONR has continued to effectively deliver regulation and wider commitments set out in its Corporate Plan. This higher staff turnover has not impacted on the performance of ONR during 2023-24.
• The current CE/CNI will retire at the end of October 2025. During meetings of ONR’s RRC and Board in April 2024, options and timeline for the recruitment of their successor were considered and agreed, with the details due to be shared with DWP and DESNZ. Following their agreement, recruitment will commence, with the aim of allowing for a significant period of handover between the outgoing and new CE/CNI.
• ONR’s Organisational Review project, supported by PwC, has more recently proposed changes to the senior level structure and governance of ONR, a consequence of extensive external benchmarking work and consultation completed by the project. The proposals, which are intended to ensure ONR is well positioned and prepared for the future environment, were presented to the ONR Board in early 2024 and gained the Board’s approval.
• DWP through its sponsorship role regularly holds the ONR Executive Team to account against this recommendation. For example, succession planning was an agenda item in February 2024 at a DWP chaired Quarterly Assurance Review (QAR) meeting and will be a regular item for QAR discussion.  Organisational management including capacity, capability and succession planning is regularly discussed in meetings between ONR and DWP and in ARAC meetings and is also considered in the DWP Annual Assurance Assessment of ONR.

Going forward: 

• ONR will continue to keep its resilience under review, given the dynamic environment within which it is operating.

DESNZ and DWP support ONR’s drive to embed succession planning over the last two years. Whilst this recommendation relates to the resilience of the 2022 changes, the spirit of this recommendation is particularly important now as ONR approaches a period of change: the bedding down of the outcomes of the recent organisational review, a new permanent Chair next year, a new CEO/Chief Inspector by Autumn 2025, and other senior level changes.  We have therefore reminded ONR that resilience of the organisation, particularly to external events, is of central importance and should remain a priority for the Board. 

Recommendation 4 is closed.

ONR Board

The PIR review panel were impressed with the conduct of the Board meetings but noted that supporting paperwork was at times too detailed and repetitive.  Whilst the Board took welcome steps to improve the presentation of material, the review team felt there was a wider cultural issue identified across ONR on how information was presented.

Recommendation 5a:

As a part of wider actions on efficiency, we recommend ONR continues to keep paperwork under review, embedding a culture of ‘less is more’ where appropriate.

ONR has acted against this recommendation by:

• Keeping the level of supporting information under constant review to allow the Board and OET to make decisions, receive assurance and review performance. Some relevant examples to highlight a shift to a ‘less is more’ attitude and breaking down the wider cultural issue identified in the report are:
  • Streamlined corporate publications – ONR reviewed the suite of corporate publications to identify potential areas for improvement. As a result ONR produced a streamlined Corporate Plan for 2023/24, and for 2024/25, taking on feedback from its Board. The revised, concise format as well as meeting accessibility requirements and being more user-friendly for stakeholders, links planned activities more explicitly to ONR’s Organisational Effectiveness Indicator (OEI) Framework, strengthening ONR’s strategic narrative and visible line of sight across the strategy, Corporate Plan and Annual Report and Accounts (ARA).
  • Other publications and documents have benefited from a streamlined approach, including the CNI Annual Report and ONR’s ARA. With positive stakeholder feedback on the focussed and informative nature of these.
  • Standardised and digitised reporting – ONR has leveraged the benefits of moving to its own IT infrastructure and development of capability within its Information, Technology and Delivery (ITD) Directorate to develop automated performance dashboards and risk reporting for multiple purposes. This has reduced the volume of information.  The ONR Board and OET have benefited from having the appropriate level of information to allow them to make decisions, receive assurance and review performance. Increasingly moving from manual collation and presentation of data to automation has created time for colleagues to focus on higher priority work
  • Alongside this, ONR has standardised the format of financial, performance and risk information reported to OET, Board and Government. This includes the QAR meeting, where government officials have commented favourably on the benefits and focussed nature of the dashboards.

Going forward:

• ONR will continue to optimise performance data to improve its data maturity through the provision of complete, assured and timely KPIs to appropriately support decision making and performance review at various levels within ONR.
• ONR will assess how to use digital technologies and data science, including the adoption of artificial intelligence (AI), to reduce the number and volume of documents produced, whilst providing better insights and support to governance and regulatory decision making.
• ONR is also considering how to simplify and streamline its guidance, supported by modern digital technologies.
• ONR has allocated dedicated resource to consider how it can modernise further, with initial focus on understanding what a modern regulator looks like.

All these activities for recommendation 5a are supported by the planned activities referenced for Recommendation 3 which focus on the cultural elements of efficiency and embedding the mindset. 

DESNZ and DWP are content that ONR is now embedding a culture of ‘less is more’ in the material prepared for accountability and Board meetings, leading to time saving efficiencies.

Recommendation 5a is closed.

Recommendation 10:

To aid in realising IT and digital projects (such as WIReD), we recommend ONR considers co-opting a C-suite IT specialist to its Audit and Risk Assurance Committee for at least the financial year 2022/23. This would provide deep specialist support and ONR’s Chief Information Officer (CIO) and Chief Information and Security Officer (CISO) with a sounding board.

ONR has addressed this recommendation through the appointment of the current Security Non-Executive Director ^{[footnote 1]} to the Board in 2020 and, since 2023 the independent member (not a Board member) of the Audit and Risk Assurance Committee (ARAC) has also brought significant added experience, but not specifically an IT specialist. These appointments have enabled Board and ARAC to offer greater diversity of challenge, and effective support and oversight to a number of significant IT improvements since the PIR was completed.  These have been possible due to ONR substantially enhancing its internal IT capability since 2022.

This has enabled it to achieve significant results, a major transformation for the organisation, as evidenced below:

• Development and approval of a new IT Strategy representing a fundamental shift in ONR’s approach to IT, that is being effectively delivered. This is likely to evolve into provision of a shared service to other Arm’s Length Bodies in the future.
• Development of a new Digital Data strategy that is now being implemented.
• A comprehensive revision to ONR’s IT Service Provider - the development of a robust, efficient and fit-for-purpose ONR / 3rd Party Supplier hybrid IT support model.
• MiONR- the delivery of real time management information.
• Developed and delivering a new Corporate Cyber Security Strategy that has seen ONR move towards the vanguard of cyber security amongst ALBs
• Secured Cyber Essentials Plus and ISO/IEC 27001 accreditation and Green rating against Regulation 22 of the Nuclear Industries Security Regulations 2003
• Launched a new information security policy statement in 2023 that will assess and manage ONR’s information security risk.
• Delivered a 2024 ONR Corporate Security and Resilience Roadshow to promote good information security management in ONR
• Backup Resilience – the delivery of a state-of-the-art recovery solution for ONR data and cloud infrastructure, in the case of catastrophic IT failure, or malicious attack.
• Completion of a full IT equipment refresh for all ONR staff during 2023.

Recommendation 10 is closed.

HR, people and culture

Overview

The PIR report noted that ONR has a set of organisational values which underpin how it behaves internally and with its stakeholders: accountable; open minded; fair and supportive.

In April 2022, ONR commissioned a research team at the Alliance Manchester Business School (AMBS) to develop a model of ONR’s culture, identifying its underlying beliefs, assumptions and values. The 12-month study drew on interviews with staff and stakeholders, focus groups, a staff survey, a document review and observations of meetings and external interactions, as well as insights from other regulators.

The independent assessment found that ONR has a positive reputation as a supportive, trustworthy and transparent regulator. It also revealed how its culture impacts how it responds to challenge, risk and change, both internally and externally. As a result of the AMBS report, a key focus for ONR is ensuring all four of its stated values (accountable; open minded; fair and supportive) are embedded internally.

DESNZ and DWP welcome ONR’s production of a new vision statement in December 2023 laying out ONR’s aspirations for ONR’s organisational culture and acknowledge ONR will need to ensure that it forms the basis of future initiatives to strengthen its organisational culture.

ONR Vision Statement, December 2023:

We value our role as an independent regulator of the nuclear industry, and we’re committed to delivering our important mission. We work hard to be professional, supportive and inclusive, and empower our people and teams to achieve together. Respect, trust, and fairness underpin how we work. As a learning organisation, we are open-minded and value innovation and new ways of doing things. Our leaders are accountable for making decisions, but diverse views are welcomed and encouraged.   

It also noted the ‘Leading ONR’ events that have been held to develop alignment across circa 90 senior leaders and influencers in the organisation on cultural change.

Recommendation 3:

…to ensure benefits from resources and new systems are maximised, we recommend ONR develops an enduring approach to identifying opportunities and consolidating efficiency across the organisation, with findings reported to the Board at regular intervals. The initial report in financial year 2022/23 should reflect findings from current organisational reviews, and benchmarking of structure, capability and capacity, as well as performance and talent management and business-as-usual project reviews. (See also Value for Money chapter).

ONR has undertaken work to ensure focus on delivering efficiencies by:

• appointing an Efficiency Lead in April 2023, who initiated an organisational efficiency project to establish an enduring organisational approach to identify, drive, deliver, measure and report on efficiencies and creating the mindset and environment where all colleagues contribute to more efficient ways of working.  The outputs of this project include:
  • During 2023, establishing quarterly reporting to OET and the Board carried out in a consistent manner and assured through a central team;
  • Targeting engagement to build knowledge and increase capability, evidence of impact on mindset is the different conversations taking place around costs, cost reduction and efficient ways of doing work.
  • Publishing an Efficiency Framework, launched internally in April 2024, based on the Government Efficiency Framework, with supporting guidance.
• Delivered productivity improvements across its regulatory activities during 2023/24, equating to ~8% of its total regulatory resources, evidenced to OET and the ONR Board. This has allowed ONR to accommodate additional GDA and other new build support work without increasing cost case.
• Achieved cashable savings during 2023/24 of just under 1% of its annual budget.
• Condensing over 50 regulatory processes down to 8 key processes, aligned with the IAEA, which has reduced the resource burden on maintaining these processes, whilst improving its consistency and proportionality across statutory purposes.
• Embarking on a strategic theme of work ‘Modernising The Way We Work’. In the 2023/24 Corporate Plan ONR committed to continue to simplify and identify efficiencies in its ways of working.
• Continuing to work with DWP, which has encouraged and supported ONR’s work to streamline its operations as it matures.  DWP considers that clear arrangements have been set by the ONR Efficiency Lead with the first full year’s reporting on efficiencies delivered.

All of the above have been regularly considered by the ONR Board and ARAC.

Going forward into 2024/25, ONR will

• continue its drive on achieving efficiencies, focussing on cultural elements providing the training, tools and resources to empower all to take responsibility for continuously improving what ONR does and how they do it.  This will include:
  • continued communications and engagement to reinforce and support the organisational approach,
  • developing an efficiency network to share ideas and best practices and
  • refining its approach to recording and reporting on efficiencies to show impact on performance.
• Engage with external stakeholders and government departments to explore the beneficial use of modern technologies, including artificial intelligence, to improve productivity and efficiency further. ONR is likely to adapt the ‘think big but start small and with purpose approach’ that has been successfully adopted by some government departments in the UK and at Federal level in the USA.

DESNZ and DWP are content that ONR has put in place the groundwork for an enduring approach to identifying efficiencies.  We support ONR’s emphasis on creating an environment where everyone in the organisation takes responsibility for making ONR more efficient.  We look forward to ONR reporting regularly on a broad range of efficiencies across its organisation.

Recommendation 3 is closed.

Suggestions

There were several suggestions made in the 2022 report.

ONR’s progress update on suggestions in this theme:

• ONR appointed a delivery partner who has worked with OET and all Directors to continue to deliver leadership development. ONR plans to launch its Advanced Leadership Programme (which the suggestion refers to) in 2024.
• ONR is pleased to see positive results in terms of female recruitment and career progression: 56% of new hires were women, and by role type, 46% of new hires for technical roles were women, which is positive when compared with the STEM talent pipeline for technical roles (UK STEM workforce 26%, female nuclear workforce 23%, female STEM graduates 26%).
• To help ONR attract and increase its representation of people from minority ethnic backgrounds and to retain a diverse workforce, ONR has partnered with VERCIDA, a careers site that collaborates with employers who respect a culture of inclusivity, diversity and accessibility and are committed to these attributes. It was an opportunity to highlight the diversity of roles that ONR has, and benefits offered. ONR also updated and promoted, through social media, the ‘ONR Work for Us’ segment with a broader representation of colleagues.
• ONR is dedicated to enhancing its recruitment strategies. An inclusive and comprehensive recruitment audit undertaken by disability partners Purple Tuesday during March 2024 was aimed at refining recruitment practices to be more inclusive and representative of the society it serves. With the ultimate objective to formulate solid recommendations for ONR to become a benchmark for inclusive recruitment, fostering a culture that values and actively encourages diversity.
• ONR is a member of the EDI Alliance, part of the Nuclear Skills Delivery Group.

Financial administration

Overview

The PIR report sets out how ONR’s financial accounting responsibilities are guided, and how it recovers its costs.  The report noted good financial planning and management of the overall budget, with variances largely out of ONR’s control.  The report also noted GIAA confirmation of the quality of ONR’s financial controls in 2020/21. However, the report also noted several comments from duty holders about the transparency and predictability of costs, stemming from inefficiencies in the current invoice and billing system. 

Duty holder fees

ONR’s 2019 analysis of alternative charging models showed that a new model would be required to meet the specific needs of ONR’s regime, which would require an overhaul of ONR’s internal processes (and potentially legislative change).   In 2021, ONR committed to review and update its charging strategy and associated model by 2025 to address duty holders concerns about predictability of charges and income.  At the time of the 2022 report, IT infrastructure updates were already underway to streamline several financial processes.

Recommendation 8:

We recommend by March 2023 that DESNZ, DWP, and ONR explore the scope for alternative charging arrangements, identifying what can be improved within the current legal framework, and what will require legislative change to current Fees Regulations to realise benefits for ONR and duty holders. This should be considered alongside the recommended assessment of financing arrangements in Recommendation 7.

DESNZ and DWP have been exploring the scope for alternative charging arrangements with ONR since the review reported in 2022. We initiated a project to support Recommendation 8 in July 2022, and this has led to the following outputs:

• Between July 2022 and February 2023, DESNZ, ONR and DWP officials held a series of workshops and discussions to understand the challenges posed by ONR’s fees and charging regulations.
• All parties agreed the following as key issues:
  
  i) A funding gap exists where some activities are not chargeable to dutyholders nor funded by DESNZ or DWP (mainly relating to being able to engage on and be reimbursed for a range of nuclear policy related discussions for DESNZ or OGDs, some international-facing work).
  ii) The disbenefits of using the current Charging Agreement process for funding of existing activities with DESNZ, which can lead to disproportionate resource, time and reporting requirement, and do not cater for unplanned work.
  iii) Longer term planning, support for innovation and research activities to prepare for novel technologies can be restricted by the need to identify links to existing dutyholders.
  
  
• In February 2023, DESNZ supported the setting up of a Future Funding Task and Finish Group made up of ONR, DWP and DESNZ officials to examine alternate options to address these issues.
• The Future Funding Task and Finish Group commissioned a benchmarking exercise against comparable health and safety focussed regulators.
  • The study established that these regulators had mechanisms available that allowed for flexibility, the building of financial reserves for investment. There were four main ways that flexibility was achieved:
    • Grant funding which was not tied to specific activities;
    • Revenue from activities charged out to customers at commercial rates that could be retained and reinvested;
    • Levy-based funding that was not tied to specific activities;
    • Ability to carry surplus / deficits by agreement with parent department and HM Treasury.
• Options involving major reform of ONR’s financial management approaches were not taken forward by ONR as analysis showed they would not provide sufficient certainty to industry to warrant the significant investment in changing the process.
• ONR considered establishing a commercial arm to provide reserve capacity for new nuclear assessments following a senior DESNZ/ONR meeting.  ONR concluded that this form of a commercial arm would not support new nuclear as effectively as increased use of technical support organisations, and as a result they are not exploring a commercial arm further.
• One approach that was taken forward was ONR charging for early engagement. DESNZ, ONR and the Future Funding Working Group successfully established a route to charge reactor vendors for early engagement ahead of formal regulatory processes. Implementation of this cost recovery route has enabled delivery of the early engagement processes in the nuclear civil roadmap, published under the previous government, in January 2024.

To address the remainder of the funding gap, the Future Funding Working Group supported an options paper taken forward to the ONR OET Board in October 2023.

Going forward, DESNZ will work with ONR and DWP to:

• establish the baseline for increased, enduring grant funding for the purposes;
• consider also the requirement for using grant funding to build reserve capacity;
• establish, with wider government advice, options to administer and disburse the grant and govern activity and spend under the new arrangements

DESNZ and DWP consider the scope of this recommendation complete, consideration having been given to a range of alternative charging arrangements.  DESNZ wants to give ONR more certainty and confidence to be able to plan appropriately and will therefore, during 2024-25, establish the case for grant funding arrangements subject to spending review, business case approvals and value for money assessments.

Recommendation 8 is closed.

Loans

The report made no specific recommendations to overhaul the existing loan financing arrangements which were noted to lack flexibility, but ONR and DWP were to take forward several activities to make the loan generation process more efficient.

Recommendation 7:

We recommend DWP and ONR ensure lessons learnt from the past year are embedded at all levels, with a continued focus on efficient and effective ways of working.

This should include:

• development of additional guidance alongside the DWP/ONR Framework Document during its 2022 review, to provide a consistent framework within which ONR can prepare and submit business cases and DWP can support approvals, in line with HM Treasury requirements and public funding procedures. This should clearly describe the nature of financing required, how it impacts ONR’s operational delivery, the type of funding available, and the requirements, processes, and timescales for loan approvals
• an assessment of current financing arrangements by March 2023, alongside the consideration of charging arrangements in Recommendation 8, confirming the ‘art of the possible’ within the current framework and any unintended impacts and relevant solutions including legislative change if necessary.

ONR has already:

• Capital Funding:  ONR is working closely with DWP on finalising a revised version of the Framework Document. In addition, a supporting agreement between DWP and ONR is under development, which underpins the Framework Document, setting out the detailed working arrangements that will support a variety of ONR’s activities.
• Applied the lessons learned from the previous loan approval. When ONR requires financing from government, it now works more closely in partnership with the DWP sponsorship team to ensure the arrangements for business case development are understood from the outset. Business cases are developed in line with HMT requirements, and ONR provides full transparency of the nature of funding required, the purpose of the funding, the impact of not receiving it and the relevant timescales to which ONR is working.  ONR’s horizon planning does not indicate a need for capital loans in 2024/25 or in the strategy period up to 2030.
• ONR completed a review of its charging arrangements, which informed its charging strategy. The charging strategy was submitted to and approved by its Executive Team in February 2024, and by the ONR Board at the end of April. The strategy sets out the basis for charging, the challenges which have been faced, the activity ONR has undertaken to explore alternatives and the operating focus in the coming years.
• Since vesting in 2014, ONR has explored and assessed alternative charging models looking at principles, processes, financial regime and governing legislation. The conclusion from ONR’s analysis is that its charging model and principles are fit for purpose, and that they provide an appropriate financial regime with minimal risk. The charging agreements satisfy ONR’s public corporation status, placing minimal risk on wider government intervention, helping to ensure ONR’s independence is sustained.

In relation to accuracy of budget setting and financial monitoring and control, ONR has:

• Matured its regulatory planning to inform multi-year forecasting for dutyholders and increase certainty in forecasts, complemented by closer working with dutyholders and government to influence improvements in demand signals (e.g. around civil and defence new build programmes);
• Recognised the deficiencies in its budget setting and adopted an improved approach to its annual planning cycle, that included streamlining and simplifying the overall planning and budgeting process, operating a ‘right first time’ ethos, as well as reinforcing accountability for strong financial management and vesting control appropriately in directors/budget holders. This has led to an improved and more efficient annual budget development exercise. For the 2024/25 budget, both the ONR Board and DWP commented positively on the improved, more efficient process.
• Allocated dedicated Finance Business Partners (FBP) to each of its operational divisions, fulfilling a key role in providing subject matter expertise to support those with budgetary responsibilities to effectively monitor and manage spend.
• Adopted the use of MiONR, which uses Power BI to provide accurate and timely Management Information, in this instance finance data to budget holders, who use it to take action and make decisions to appropriately control spend.
• Demonstrated much improved budget management, oversight and accountability by strengthening financial business partnering across the organisation and coaching budget holders appropriately. This resulted in the 2023/24 outturn being within 1% of the DWP approved start of year budget.

Going forward

• ONR will explore opportunities to continuously improve the effectiveness of its existing arrangements, including:
  • Further improvements to its strategic workforce planning process to enhance understanding of its resource requirements, including supply capacity and capacity against demand signals.
  • Exploring and assessing alternative funding routes in collaboration with DESNZ and DWP to ensure ONR can respond effectively to the UK’s changing nuclear landscape over time. Work highlighted under Recommendation 8 above.

DESNZ and DWP note ONR’s recent review of its Charging Strategy, which sets out its analysis of how they charge for their services.  We encourage ONR to be as open as possible with stakeholders when explaining how their charging model is fit for purpose, and in line with the spirit of this recommendation, and how ONR has learned lessons on efficient and effective ways of working.  Beyond the charging strategy, we note the improvements to its financial processes.

Recommendation 7 is closed.

Suggestions

There was one suggestion for this theme.  ONR has not been able to adopt this suggestion due to systems constraints with its third-party invoice processing supplier, Shared Services Connected Limited (SSCL). All dutyholders now receive charging breakdowns, which contain details of activities and services and their costs enabling ONR to provide the itemised information suggested. These are issued as supporting information which accompany the monthly/quarterly invoices.

Value for money

Overview 

The PIR report noted that it was important that ONR embedded efficiency as part of its core culture.  The report noted that although ONR had made best efforts to forecast efficiency savings in 2022, if government ambitions for nuclear were accelerated, then it may impact on savings achieved in the future. 

The previous Government’s Nuclear Roadmap was published on 11 January 2024 and set out their accelerated ambitions on nuclear.  ONR is central to the delivery of the regulatory commitments made in the roadmap. Whilst all commitments are within ONR’s current capacity to deliver, there will be an impact on savings realised through savings in staff, estate and operational efficiency costs.

Costs to industry

The PIR report recommendations around value for money focus more specifically on indirect costs incurred by industry, in meeting requirements of ONR.  The report noted some excellent examples of initiatives to create fit for purpose solutions, but several stakeholders raised the tendency for more junior staff to ‘gold-plate’ solutions by overestimating what is required.   Under the Deregulation Act 2015, in line with the Growth Duty, ONR is required to consider the economic impacts of activities on individual duty holders. 

Recommendation 1a:

We recommend ONR continues to complete all identified actions in the 2017 NERA report, with an urgent focus on embedding new processes and behaviours as business-as-usual, given the ‘Growth Duty’ came into effect in 2017. 

In 2016, ONR commissioned an external independent report known as the ‘NERA report’ ^{[footnote 2]}, which set out several actions to support ONR in meeting requirements of the Growth Duty (under the Deregulation Act 2015, where ONR is required to consider the economic impacts of activities on individual duty holders and the sector more widely).  As part of this, ONR were asked to maximise the efficiency and proportionality, and potentially lowering the costs, of the current regime. The NERA report concluded that despite fully meeting its primary responsibility as an effective enforcer of nuclear safety regulation, there was scope for improving ONR’s consideration of its economic impact, which ONR accepted, implemented and these actions have now been closed by ONR.

At the time of publication of the 2022 report, ONR had already closed NERA recommendations, relating to the following themes:

(i) encouraging more external comment and comparisons

• ONR has undertaken a range of activities to seek and receive feedback from dutyholders, including international benchmarking.  For example, from 2017 ONR commenced regular stakeholder surveys. The most recent 2024 survey specifically focussed on licensees and dutyholders, with the aim of getting improved insight into key areas. It involved 151 responses and 15 in-depth interviews (more detail is provided in recommendation 1b and 2).
• From 2018 ONR sought feedback on any inconsistency or disproportionality in its regulation via the Safety Directors Forum and benchmarked the direct cost of regulation with 5 international regulators. In 2022, ONR benchmarked costs with fellow health and safety regulators through the UK Health and Safety Regulator’s Network (UKHSRN).
• Since 2022 an important source of direct feedback from industry to ONR has been provided by the Annual Review of Regulation, at which the industry ONR regulates is invited to attend and give open and constructive feedback, which has been used by ONR to improve its regulation.

(ii) more effective promotion and monitoring of the Enabling Regulation initiative

• ONR’s Enabling Approach is now more mature and well understood and respected across industry, DESNZ and MOD.   The approach is regularly commented on and complemented domestically and internationally, and in some instances mirrored. ONR has also updated its ‘Enabling Regulation Guide’ in 2020 to include a new principle for inspectors to consider economic factors and impact.
• ONR’s enabling approach has helped reduce the economic burden on the dutyholder in many ways, including for the legacy remediation projects at Sellafield.
• To further explain ONR’s regulation several key documents have recently been published including: ONR’s pro-innovation approach to AI regulation published in April 2024, this policy paper outlines the strategic approach to the regulation of AI and sets out how ONR will continue to monitor performance against the 2024/25 Corporate Plan.
• Along with the Environment Agency and Natural Resources Wales, ONR has recently launched a new early regulatory engagement framework for interested parties to deploy nuclear reactor technology in Great Britain. It aims to enable applicants to develop their understanding of regulatory processes and expectations early on in their projects and provides a new way for interested parties to engage with ONR. It has been well received and is already being used by the civil new build community.

(iii) the use of economic advice in the framing and assessment of some issues

• ONR recognised the need to ensure due consideration of the economic burden in cases where cost implications may be substantial. They have updated their guidance for inspectors on the application of “So Far as Is Reasonably Practicable (‘SFAIRP’)” and the consideration of costs.  ONR also retains the option of utilising its technical supply chain to review duty holders’ concerns.

(iv) refinement of its current guidance on ‘So Far As Is Reasonably Practicable’ (SFAIRP) and gross disproportion

• ONR has reviewed and clarified its guidance on the interpretation of ‘SFAIRP’ and ‘gross disproportion’ for its inspectors and placed greater focus on the effective and consistent application of SFAIRP during inspector training.

Since the 2022 report, ONR has closed the one remaining recommendation relating to the following theme in the NERA report:

(v) improving ONR’s knowledge of the costs imposed by regulatory decisions.

• ONR developed a documented process and template for consideration of the cost burden of regulatory decisions, the piloting indicated that it added unnecessary bureaucracy at a time when ONR was seeking to improve its efficiency. Consequently, work on this element of the process was discontinued in favour of a more proportionate and targeted approach.
• The revised approach is defined in new internal ONR guidance, published in January 2024, to support inspectors in actively considering the cost and economic impact of regulatory asks.
• ONR’s revised process requires the identification and recording of all situations where there is a significant difference of opinion between the regulator and dutyholder on the action a dutyholder needs to take and where there is a significant economic impact as a result of completing those actions.
• By recording these, ONR can identify instances where it might fail the provision of the Regulators’ Code (Growth Duty) and ensure it has taken all steps to demonstrate compliance.
• In all such instances, there will be detailed discussions between ONR and those that it regulates, to identify an appropriate and legally compliant solution. This is an infrequent occurrence and is, in practice, generally resolved to the satisfaction of both parties.
• Examples where fit for purpose solutions have been develop and agreed with licensees, considering broader issues, include:
  • Installation of filtered containment ventilation at Sizewell B: Following the Fukushima accident in 2011, the IAEA initiated a series of ‘stress tests’ across its member states. One of the findings of these stress tests was that reactors like Sizewell B should be retrofitted with filtered containment ventilation to reduce public radiation exposures in the event of a loss of containment accident. This was anticipated to cost ~£40 million. ONR engaged with EDF regarding the risks associated with this with an agreement that this was not necessary or proportionate and were also concerned about the implications of this on the Hinkley Point C (HPC) design.
  • Discussion with EDF over the last few years resulted in an agreed position being reached whereby retrofitting of filtered containment ventilation was not required immediately. Rather, it would be related to the safety case necessary to justify a lifetime extension of Sizewell B, and that it would be installed at an outage leading up to the lifetime extension itself. A position that ONR has had to explain to the international regulatory community. 
  • Sellafield Ltd: The special nuclear materials (SNM) areas at Sellafield continue to receive significantly enhanced regulatory attention for nuclear safety reasons. ONR engagements with Sellafield Ltd. have been effective and enabling, focused on achieving commonly agreed outcomes. The open and honest engagements provided Sellafield Ltd. with the opportunity to provide views and constructively challenge ONR. The actions to achieve the desired outcomes associated with key regulatory issues within SNM were jointly agreed.
  • Sellafield Ltd has made good progress against the key regulatory issues associated with improvements to, and remediation of, some of its ageing SNM facilities. For example, within Finishing Line No. 3, Sellafield Ltd. successfully completed the containment wall closure and vent re-balancing work in September 2022. In this instance (and other areas) detailed discussions between ONR and Sellafield enabled an appropriate and legally compliant solution to the satisfaction of both parties.

More broadly in support of this recommendation, discussed further at recommendation 1(c), ONR has already:

• Undertaken a ‘Modernising our Regulation’ project, part of which, the Risk Informed and Targeted Engagement (RITE) approach, is aimed at equipping regulatory staff with confidence, knowledge and skills to target their engagement and interventions in an efficient and effective manner.  The RITE approach encourages inspectors to focus on hazards and risks which are the highest and least well controlled. Guidance was published in May 2024. ONR continues to undertake senior level engagements at Managing Director/Chief Executive and Director to Director level to identify and explore concerns around the cost of regulation.

Going forward,

• ONR has a strategy for embedding RITE into its culture and arrangements. The RITE policy sets out the key principles that ONR’s regulatory staff will be expected to adopt in their behaviours, culture and decision making. Inspectors will be empowered to adopt a questioning attitude to pre-conceived ways of working and apply innovative approaches in accordance with ONR’s enabling philosophy. ONR will be producing a set of RITE champions to coach across the organisation and measure impact.  ONR has prepared a structured plan to implement RITE longer term.
• ONR will be able to use the records noting contentious and economically significant differences in action between duty holders and inspectors to identify instances where it might fail to meet the Growth Duty and take action to ensure compliance is demonstrated.  DESNZ has asked to see examples of the guidance being used in practice.
• Future annual reviews of regulation will allow CEOs/MDs and representatives of the organisations that we regulate to provide feedback on ONR’s regulation.

ONR provided progress updates to its Board in 2021 and 2022 to demonstrate that all actions from the NERA report were complete. It is right that ONR continues to consider the economic impact of its regulation, both in terms of proportionate decision making and efficient working.

Recommendation 1a is closed.

Risk management

Overview

The PIR report noted that ONR as an organisation, including its senior leaders, was on a journey to improve its understanding and articulation of risk, to ensure the actions reflect the needs of a maturing organisation.  This section relates to organisational risk, rather than risk in the nuclear sector which is well understood by ONR.

Risk Appetite

The report noted a disconnect between ONR’s risk appetite statement and messaging around its organisational priorities, and welcomed ONR’s review of the risk appetite statement, finalised just after publication of the 2022 report.  However, the review team asked ONR to focus on ensuring it embed active risk behaviours across the organisation.

Recommendation 6a:

We recommend ONR reviews and revises current risk management training by March 2023 to ensure staff understand how to improve risk taking through the implementation of effective risk management techniques.

So far, ONR has already:

• Carried out informal training delivered in 2023/24 which includes:
  • Lunch and Learn sessions for regulatory specialisms, including specific radiation protection training;
  • a key session at the most recent Leading ONR event on risk appetite, involving 90 plus senior leaders – including risk owners, risk champions and influencers, and
  • a workshop to understand and review the risk appetite statements.
• Reviewed its approach to training as part of Risk Improvement Plan (RIP) activity. This has been informed by a training needs analysis and the results analysed for risk champions, risk owners and Board. The outcome was presented to ONR Executive Team (OET) and the Audit and Risk Assurance Committee (ARAC) in January 2024.

DWP, as sponsor, considers ONR’s Risk Management Framework to be a comprehensive review of risk and that ONR’s Risk Improvement Plan demonstrated that ONR is actively working on embedding risk improvement and management across several areas of the organisation. 

Going forward:

• As a result of the training needs analysis, ONR will work with the Institute of Risk Management to produce a formal course that is tailored to the needs of ONR. The formal training course will be delivered during 2024/25 to risk champions and risk owners in ONR and then utilised for any new starters joining the organisation who require a greater level of risk understanding.

DESNZ and DWP acknowledge ONR’s efforts in the last year to review and revise risk management training. The formal training course with the Institute of Risk Management will be a positive step forward to embedding risk management across the organisation.

Recommendation 6a is closed.

Recommendation 6b:

To embed new behaviours at all levels, we recommend ONR discusses with the Board, by July 2022, how it currently communicates its risk appetite within the organisation, identifying opportunities to improve messaging and highlight how risk will be built into decision making.

ONR has already:

• Appointed a senior risk management professional as the Head of Risk and Assurance, in September 2023, to improve ONR’s approach to risk management. Since their appointment they have had a positive impact on risk management at all levels. Improvements have been highlighted in all aspects, including driving ONR’s RIP, risk appetite, risk management and training.
• Reviewed its risk appetite statement annually with the Board, most recently in May 2024, and published the statement on its website since 2022. Over the last 18 months there have been changes to ONR’s risk appetite, including being more relaxed in some areas. These have been actively communicated to ONR colleagues via the intranet and engagement sessions. This has led to more meaningful discussions, and decisions and effort more aligned with ONR’s risk appetite. In addition:
  • Operational risk training regarding the use of risk appetite and other topics is planned as a continual cycle in 24/25.
  • A risk in the boardroom training session has been planned for all directors, to be provided as part of new Institute for Risk Management training (see recommendation 6c).
• The Risk Management Framework provides ONR staff with an understanding of ONR’s expectations and has been supported by bespoke training and general awareness sessions which have been delivered as part of ONR’s Risk Improvement Plan (RIP).
• Progress with the RIP is regularly reported to ONR’s Audit and Risk Assurance Committee (ARAC) and assurance on ONR’s organisational risk management, including communications and engagement, is provided on an annual basis through DWP’s Annual Assurance Assessment (AAA) process.

Going forward ONR will:

• continue to embed sound risk management behaviours at all levels in the organisation.  This work is a continual piece that will include
  • specific risk training,
  • a new drumbeat for risk review across the organisation,
  • enhanced assistance from risk professionals, via the Risk and Assurance Team,
  • movement to a risk-based assurance programme and
  • consideration of how to maintain a positive tone-at-the-top approach to risk management, which is continuing to help improve risk management culture across ONR.

DWP have witnessed, through the ARAC, a significant level of new activity that is being generated by the new Head of Risk and Assurance and are confident that actions will be followed through. 

Recommendation 6b is closed.

Improving risk management

Back in 2022, ONR identified several actions with internal auditors, Government Internal Audit Agency (GIAA), to adapt its risk management framework to ensure alignment and clear compliance with HMT’s Orange Book principles.

Recommendation 6c:

To further support ONR in embedding improvements, we recommend ONR commissions a risk maturity analysis by its internal auditors or other external specialists to review risk at a strategic level by March 2023.

So far, ONR has:

• Completed a risk maturity assessment on a self-assessment basis by ONR’s Head of Risk and Assurance. The Government Internal Audit Agency (GIAA) were approached to undertake the analysis but did not have the resources available. Being new in post and a specialist in this area the Head of Risk and Assurance was able to undertake the assessment with sufficient objectivity. DWP welcomed the introduction of this appointment to identify and assess strategic risk areas, and to drive forward and embed risk improvements in the organisation.
• Undertaken the risk maturity assessment based on DWP’s Risk Management Maturity Model. The review concluded that ONR is currently a risk-aware organisation. The maturity assessment set out a full programme of work to improve and embed risk management in the organisation. The RMA was considered by ONR Executive Team (OET) and ARAC in January 2024 who supported the proposed improvements (which form part of overall RIP).

Going forward:

• The programme of work, set out in the maturity assessment, includes:
  • A strategic risk group, made up of all Directors from across the organisation will be established.
  • Reviewing the Risk Management Framework to ensure that it follows the principles of the Orange Book and is providing an approach to risk management which addresses current risks to short- and long-term objectives. This will lead to the production of further documentation such as a risk management procedure and updates to risk appetite across categories.
  • In 24/25 a new drumbeat for the review of risk registers will be established. With a requirement for all Directorates to review their risk registers on a quarterly basis, testing their key controls.
• DWP Risk Profession will monitor improvements against the risk maturity analysis (RMA) programme of work.

DESNZ and DWP note that ONR is evolving its risk management approach as an organisation and DWP is confident, through its oversight at the ARAC, that ONR will continue the next steps to deliver against all the risk-related recommendations. 

Recommendation 6c is closed.

Suggestions

There were two suggestions in this theme of the PIR report.  They are covered by the risk improvement plan which is referenced in the recommendations.

Changing and improving

Overview

The report noted that ONR as an organisation was continuing to develop and improve its approach to change and project management.  The delivery of a new domestic safeguards regime was held up as a successful example, and the review team noted smaller scale projected being delivered successfully, it was noted that IT and digital projects proved to be particularly challenging for ONR.

Project and programme management

The report noted that significant progress had been made since 2014 to build internal capability, including creating a Project Management Office (PMO) and recruiting project management professionals. ONR’s PMO made good progress in 2021 against a limited assurance rating from GIAA in 2020, but the report noted benefits management process needed to be improved.

Recommendation 5b:

To improve the efficiency and efficacy of change management and project delivery going forward, we recommend that ONR, by March 2023:

• updates the project mandate template to include a high-level initial analysis of alternative delivery options and articulation of monetised and non-monetised benefits, noting further detail to be included in business cases
• finalises and implements updates to benefits management processes, embedding them throughout the project lifecycle to drive positive behaviours and consistency

ONR’s Programme Management Office (PMO) has implemented the changes that were recommended by the PIR:

• Produced new project mandate and benefits management changes. The project mandate template now includes requirements to undertake a Data Protection screening and the updated business case is now compliant with the HM Treasury ‘Guide to Developing the Project Business Case’
  • ONR shared with DESNZ and DWP its project mandate template for an IT service provider programme that included a discussion of the monetisable and non-monetisable benefits.
  • ONR shared with DESNZ and DWP its benefits and business case templates for an IT service provider project, demonstrating delivery options were considered and benefits were identified.
• Worked to embed these in business-as-usual practice and have used these for three projects since (dependent on the requirements of the project).  For example, the CM9 Upgrade and the Organisational Review Phase 2. Other projects were already live prior to templates coming into practice or out of scope of business case.
• Carried out a Portfolio Project and Programme Management Maturity Model (P3M3) self-assessment in January 2022, which provided areas of focus to improve maturity. Benefits Management was a key area of improvement that was selected as a 2023/24 priority. This has involved external training in September 2023 for members of the PMO and project SROs.
• Applied the learnings from the P3M3 self-assessment work (which showed a low level of maturity), to training on, and configuring of, a new project portfolio management tool. Training for the PMO was designed to consistently capture, categorise and track benefits and allows project managers to guide project SROs in capturing benefits at an earlier stage.
• Had GIAA undertake a review of their PMO in March 2024, which notes several good practice improvements to how ONR prioritises and delivers strategic priorities.  The review also noted varying levels of compliance with processes, including at senior level and makes five recommendations for further improvement.

Going forward, ONR intend to:

• launch a new project portfolio management (PPM) tool in 2024/25 to capture, measure and track strategic project benefits and any efficiencies.
• further improve the benefits management practice by creating a dashboard, linked to the new PPM tool, which will allow anyone in ONR to view at project and portfolio benefits.
• Take forward recommendations from GIAA’s recent audit of the PMO.

DESNZ and DWP note the improvements ONR has already made to its project mandate and benefits and business case templates and looks forward to seeing these used in all projects going forward.

Recommendation 5b is closed.

Upgrading IT Systems

The report noted that ONR had significantly increased internal capability on specialist IT staff to support its upgrade of core IT infrastructure and improvements to cyber resilience.  ONR’s major digital project, WIReD, in train since 2018 to modernise and improve the ONR systems, was flagged as an area where issues had been overcome and successful improvements had been made.

Recommendation 9:

Building on the successful changes made following an internal project management focused review of WIReD, we recommend that a very brief initial (‘fatal flaw’) review be carried out by an external IT delivery specialist by September 2022. By April 2023 the same specialist should be invited to carry out a lessons learnt review. The terms of reference should be focussed on a high-level confirmation of key drivers such as go live, user testing and training procedures and be designed to confirm overall confidence on quality and value for money.

ONR has already:

• reviewed the recommendation for fatal flaw review with DESNZ (then BEIS) and DWP in late 2022. All agreed that a fatal flaw review was not appropriate as WIReD was developed using an agile product methodology, and each WIReD release was tested and proven prior to release. However, DESNZ and DWP agreed that an internal learning experience (lessons learned) review would be undertaken alongside sufficient external assurance.
• Carried out the lessons learned review as part of WIReD project closure, 35 good practices or potential improvements were identified. Recommendations raised covered all facets referenced in the PIR report relevant to (1) project management and (2) system development. Of the 35, 14 have been actioned, 14 were for awareness for future projects, 4 cancelled or retired (as they related to earlier phases of the project) and 3 are still in progress.
• Successfully operated WIReD for 18-months. At the time of the lessons learned review, WIReD had been functioning effectively for several months. We are now 18 months into WIReD operations and has demonstrated that no such ‘fatal flaws’ exist.
• Adopted learning from recent experiences including WIReD, on project initiation and encouraging discovery phases for projects before delivery. The approach has been applied to the IT Service Provider project referenced in recommendation 9.
• Tasked GIAA, in January 2023, to conduct an internal audit focussing on WIReD project closure and transition to business as usual.
  • Four medium recommendations were made. Three of these have been closed and one was not accepted as it was already underway as part of project closure.
  • The recommendation related to formalising and communicating post-transition roles and responsibilities to all relevant stakeholders, re-baselining the transition plan to ensure all critical activities were completed prior to transition and developing a post-project plan to enable re-evaluation of priorities based on user feedback.
  • ONR cascaded the lessons learned on the WIReD project throughout the organisation (through its internal reporting platform, MiONR (these are available to anyone to view). PMO also shared lessons with project managers or functions in advance of work commencing which may be applicable to the new project.
  • For continuity of learning and applying lessons/good practices, ONR appointed a Product Owner for WIReD now who was part of the project delivery team.
• Tasked GIAA to conduct a further audit of WIReD as part of the 2023/24 Internal Audit Plan, to provide additional assurance over the governance, plans and processes in place to deliver agile developments of the WIReD system to achieve full benefits realisation expected by March 2025. This was completed at the end of the 2023/24 financial year. Of relevance to the recommendation GIAA noted the following:
  • An effective feedback loop exists to provide internal/external users an opportunity to feedback on the product and request improvements where necessary, the feedback is prioritised and contributes to overall roadmap deliverables.
  • Key agile process documents are available and assurance that processes are followed is gained through sprint review meetings, deployment success and defect rates.
  • Since moving to business-as-usual benefits are not effectively monitored, managed or communicated, which needs to be addressed,
  • The high-level roadmap needs to be updated because of unanticipated work.

Going forward, ONR intend to:

• Address the recommendations from arising from the latest GIAA report once the report has been agreed and finalised.

DESNZ and DWP support GIAA’s close involvement in reviewing ONR implementation of this major digital project to modernise ONR systems and note that lessons learned continue to be considered and cascaded.

Recommendation 9 is closed.

Suggestions

There were a couple of suggestions for this theme. ONR’s summary of progress is as follows:

• ONR is in the early stages of exploring the potential applications of data science and artificial intelligence to improve the efficiency and effectiveness of our regulation.
• ONR was represented at the Innovation 2024 event, and it will be benchmarking and linking in with a number of government departments and other organisations who already have experience of these technologies.

Stakeholder engagement and working with others

There were no recommendations made under this theme in the PIR report. However, there were several suggestions made.  ONR’s progress update on these is as follows:

• ONR has included examples of sites in enhanced attention in their CNI Annual Report.
• ONR continues to engage on matters of NGO concern. During 2023, ONR undertook a series of three workshops, co-produced with NGOs to provide an insight on how ONR consider climate change when regulating the nuclear industry.
• ONR has worked with the NGO community and local residents to explain the regulatory decision making for Sizewell C and this will continue during 2024.

International engagement and co-operation

There were no recommendations made under this theme in the PIR report. However, one suggestion was made.  ONR’s progress update is as follows:

• In March 2024 ONR signed a trilateral Memorandum of Cooperation (MoC) with two international regulators to collaborate on the assessment of Small Modular Reactor (SMR) and Advanced Modular Reactor (AMR) designs.
• It will enable both good practice and experience of reviewing SMR/AMR designs to be shared between regulators. With multiple Generic Design Assessments for SMRs currently underway in the UK and abroad, the agreement will help realise opportunities for efficiency.
• The trilateral agreement signals a partnering approach that will improve both regulatory effectiveness and efficiency, essential given the rapid growth in reactor technologies that are seeking regulatory consideration and approval. Acting as an exemplar of how regulators should work together in today’s modern world.
• ONR has contributed to many international fora across all of its purposes, ensuring that the UKs and ONR interests are appropriately considered when setting international standards and requirements, via the IAEA, NEA, WENRA etc.
• ONR is a member and major contributor to the IAEA’s Nuclear Harmonisation and Standardisation Initiative (NHSI) for regulatory and industry harmonisation and standardisation for SMRs and AMRs.
• ONR has continued as an observer at ENSREG and has contributed to the development and undertaking of ENSREG Topical Peer Review II on Fire Protection. Coordinating the production of the UK’s national report.
• Participated in numerous international peer review missions to review international compliance with global standards.
• Coordinated the production of UK national reports to various international conventions and associated reviews and delivered the report at the review meeting.
• ONR has signed numerous Information Exchange Agreements with fellow national nuclear regulatory bodies to enable cooperation on areas of mutual interest and benefit e.g. remediation and decommissioning, lifetime extensions, waste management and new technologies
• Supported the Australian national regulator with the advent of AUKUS and the need to develop a new regulatory regime.
• ONR has developed close relationships with the Ukrainian national nuclear regulator and has played a key role in providing support and advice during the conflict. This has enabled ONR to provide informed meaningful advice to UK government (DESNZ and Cabinet Office) on the safety of nuclear facilities in Ukraine.

Regulatory approach

Overview

The PIR report makes specific recommendations on consistency and proportionality, which is the focus of this chapter, however it also provided an update on ONR’s regulatory performance.  Since the PIR report was published, there were two fatalities at nuclear sites between November 2022 and July 2023 and the Government has been clear there still needs to be further improvement in conventional health and safety performance across the civil nuclear sites. It is therefore appropriate that ONR has made conventional health and safety one of their priorities in its 2023-24 CNI Report, and we expect ONR to continue to work closely with duty holders to ensure safety and security are not compromised.

Consistency and Proportionality

The PIR report noted ONR’s annual stakeholder survey in 2021 had indicated concerns around the consistency and proportionality of regulation: 64% and 67% of stakeholders agreed that ONR operates in a way that is consistent or proportionate.  The PIR report also noted through stakeholder interviews that the autonomy of inspectors and a cautious approach to risk can lead to differences in how ONR monitors and enforces compliance. 

Recommendation 1b:

We recommend ONR consider how to addresses concerns around consistency and proportionality in three ways:

• ensure a culture of constructive challenge by addressing real and perceived issues around power dynamics between inspectors and duty holders, and organisational hierarchy and decision making (see para 350 of PIR 2022, i.e. recommendation 1c)
• review assurance processes to ensure they are robust in resolving consistency issues
• improve the presentation of case studies and guidance to inform how regulation works in practice and ONR’s role in realising outcomes and success

As a transparent regulator, ONR is committed to addressing actual or perceived concerns around the consistency and proportionality of its regulation. Since the publication of the PIR report, ONR has already undertaken activities providing various channels for licensees to raise concerns on regulation and gain feedback on consistency and proportionality:

(i) Ensuring a culture of constructive challenge

As part of its work to better understand drivers and causes of dutyholder attitudes and perceptions towards ONR’s regulation, ONR recently undertook a bespoke stakeholder survey. The aim of this survey was to explore in depth:

• Attitudes to innovation in the nuclear industry.
• Perceptions of ONR and their approach to innovation in the nuclear industry.
• Perceptions of the impact of Artificial Intelligence (AI) in the nuclear industry and ONR’s approach to this.
• The levels of proportionality in ONR operations and performance.

151 dutyholders took part, 15 of whom were interviewed in-depth to further explore their attitudes and perceptions in more detail. The report is currently still in draft, but results indicate significant and encouraging improvements around proportionality and consistency. For example:

• Four in five (79%) stakeholders agree that ONR operate in a way that is consistent
• Four in five (80%) agree ONR applies a proportionate approach when implementing safety and security regulations.
• 75% agree that ONR’s enforcement actions are proportionate to the severity of the breaches they address.

Meetings between ONR and those that it regulates are held at various levels. ONR has continued to use its Regulatory Nuclear Interface Protocol (RNIP) approach to provide documented evidence on how dutyholders view their interactions with ONR – they indicate that meetings and relationships are good, behaviours are appropriate, and that both parties are able to discuss important matters on an equal footing. Instances of inappropriate power dynamics have not been raised, although there are some occasional disconnects between perspectives at different points in the hierarchy of each organisation. Where this happens, these are elevated to an appropriate level for resolution.

Engagements with dutyholders are now supplemented by an Annual Review of Regulation process, which will enter its third cycle in 2024. An element of review has been to proactively seek feedback from dutyholder executives and to date ONR has received and responded to more than 70 suggestions, across the themes of consistency, internal quality control and process challenge, proportionality, relationships and transparency of costs. Progress with responses to duty holder feedback is monitored by the Regulatory Leadership Team. It has also been useful in providing insights into what ONR does well.

The adoption of the regulatory sandboxing approach over the last 18 months (see recommendation 11), part of ONR’s approach to innovation, now provides an opportunity for industry to bring new and novel solutions to ONR for discussion and development, outside the formal application of the regulatory framework. 

(ii) Review assurance processes

• ONR has several existing regulatory processes (e.g. for enforcement, assessment and permissioning), which were reviewed and implemented as part of the WIReD project, which ensure that the most significant decisions are made through a robust and well documented ‘due process’ that drives consistent application).  This ensures that decisions are balanced and proportionate.
• ONR Board, OET and RLT, continually focus on the application of ONR’s regulation. As an example, the ONR Board focuses on ONR’s regulation of different licensees during the year, with the operating divisions presenting their regulatory approach and impact, and a senior representative of the licensee also invited to attend to provide their own perspective, at times independent from the division. The Board also visits licensee sites during the year, to hold Board to Board engagements covering performance of the respective organisations. AWE Aldermaston Ltd was the most recent example and Sellafield Ltd before that.
• ONR’s work more broadly ensures that decisions with large impact appropriately consider the impact on dutyholders, e.g. enhanced decision-making process.
• ONR has a well embedded Regulatory Intelligence and Oversight function that reviews the application of our processes and the associated decisions. For example, the development of new reporting to look at the consistency and proportionality of regulatory decisions. This reporting is reviewed by ONR as part of its internal Quarterly Enforcement Decision Review.
• As part of the Organisational Review project, ONR is implementing a regulatory structure which is inclusive of our regulatory purposes – promoting a holistic approach to planning, prioritisation, and decision making which will promote a consistent a coherent approach across all regulatory work. Whilst the new integrated structure continues to develop there are already examples of joint working occurring across ONR.

(iii) Improve the presentation of case studies and guidance

• ONR continues to update case studies and guidance which highlight how various aspects of our regulation works in practice. The Guide to Enabling Regulation and CNI Annual Report(s) document good practices and achievements through collaborative working. The CNI Annual Report is launched during the ONR Industry Day, during this the key themes from the report are highlighted discussed, including the areas of good practice and areas for improvement.

More broadly, ONR has addressed consistency and proportionality challenges in this recommendation by encouraging dialogue between duty holders and inspectors and proactively seeking feedback from a range of engagements and its surveys of stakeholders.

• Over the last few years, ONR’s Industry Day and the Annual Review of Regulation have proven to be valuable ways of receiving feedback on ONR’s regulation.
• In addition, ONR has an informal Delivery Lead (DL) and Professional Lead (PL) forum where both communities meet to discuss topical regulatory matters and provides a vehicle for communications.
  • Delivery Leads are responsible for providing strategic leadership to ensure delivery of programmes of regulatory work or projects which help ONR achieves its mission. This includes undertaking a proportionate and targeted range of inspection and assessment activities. They provide constructive oversight of regulatory decisions made within their area.
  • Professional Leads are heads of technical profession, responsible for standard setting within their specialist area, which includes monitoring of consistency and proportionality, resource capability development and deployment for their profession. They are based in the Technical Directorate and often represent ONR nationally and internationally as subject matter experts.
• In support of consistent and proportionate regulation led collaboratively by DLs and PLs – the following are highlighted as examples with regular processes.
  • Proportionality of regulation: Historically, DLs determined the intervention programmes, which has resulted in under regulation in some areas (e.g. convention health and safety and fire safety) and over regulation in others (e.g. low hazard Magnox/NRS sites). This was driven by aspects of culture, perception and ‘custom and practice’. The more mature relationship which now exists between PLs and DLs, and their ability to challenge each other constructively, has allowed ONR to address areas of disproportionality effectively. Evidenced by a significant reduction in regulatory effort being applied to lower hazard sites and a far greater focus on conventional hazards.
  • New reactors: Generic design assessments (GDAs) on new reactors designed for proposed deployment in Great Britain are significant multi-disciplinary activities of considerable interest to a range of stakeholders. They are undertaken as individual projects of finite length. Learning has been taken from each completed GDA, however every GDA differs in terms of the technology, design maturity, requesting party maturity, scope and novelty. Therefore, collaboration between the DLs and PLs has been essential for agreeing the breadth, depth, areas of focus and level of resource required.
  • GDA is undertaken in a step-wise manner, with governance around the transition from one step to the next not only considering the requesting party’s readiness, but also ONR’s. Assessment is not undertaken without an overall strategy being approved and every technical topic area is required to produce a targeted assessment plan which is subject to review by the professional lead and GDA delivery lead team.
  • To bring independence to the GDA team’s thinking and mitigate the risk of topic specific thinking, the end-of-step governance includes an assurance panel (made up of the GDA delivery lead team, professional leads, and senior inspectors independent of the project) to review and challenge the overall strategy and the extent to which topic-specific assessment plans (individually and collectively) support that strategy, the extent that objectives of the GDA step are risk informed, and how much they leverage existing work from other regulators.
  • Sellafield: Regulatory decisions within the Sellafield Decommissioning Fuel and Waste (SDFW) Directorate often cannot be taken in isolation and must take into account the overall impact on timely risk reduction at the site and other strategic factors. To support the SDFW Directorate in their regulatory decision making inspectors utilise the ‘enhanced regulatory decision making’ process. The purpose of the process is to provide an enhanced level of assurance for multi-faceted regulatory decisions deemed to be of the highest significance.
  • The process has involved inputs from SDFW DLs and PLs among others. The process was successfully utilised to release permission for Sellafield Ltd. to start active commissioning and subsequent retrievals of miscellaneous beta gamma waste from the Magnox Swarf Storage Silo (MSSS) Compartment 10. Consideration of the constructive and diverse views of DLs and PLs allowed for a proportionate and consistent judgement to be made. This allowed ONR to release the permission and Sellafield Limited. Started retrievals in April 2022. Sellafield continue their programme of work on this facility.

Going forward, ONR recognises this is a matter which will require consistent attention:

• The RITE guidance (issued in May 2024) and associated training, which will be delivered during 2024/25, contain examples of what good regulation, in line with the RITE principles, will look like in practice (see recommendation 1a).
• As part of ONR’s Organisational Review project, the interfaces between its operational directorates, the DLs and PLs will be reviewed to ensure that robust formal arrangements are put in place for regular discussions to consider the effectiveness of ONR’s regulation, including its continued proportionality and consistency.
• ONR will update the Guide to Enabling Regulation during 2025.

Recommendation 1b is closed.

Recommendation 2:

Using these insights [from the stakeholder survey and elsewhere], we recommend the Executive Director of Operations presents to the Board and relevant government departments by December 2022, on how ONR is ensuring significant improvements in consistency, proportionality and value for money, across regulatory purposes. Assurance should be provided that planned work is sufficient to drive at least a 10-percentage point increase in stakeholder survey consistency and proportionality by 2025 in line with ONR’s Stakeholder Engagement Strategy 2020-25 commitments.

To address this recommendation, ONR has already:

• set out in the 2020-25 Stakeholder Engagement Strategy, that by 2025 they aimed to have achieved a 10%-point increase in stakeholder scores around proportionality and consistency (based on 2019 scores). The 2019 baseline was 59% and 62% respectively. During the last full survey in 2022, these had moved to 67% and 66%. Since 2021 scores across both areas have remained relatively unchanged.  DESNZ and DWP acknowledge this is a challenging target, but the changes are an indication of the impact of ONR’s efforts. Whilst not directly comparable the latest targeted stakeholder survey indicates a further increase with 80% agreeing ONR takes a proportionate approach and 79% that it operates in a way that is consistent.
• conducted two more full scale surveys since the 2022 report and following a review of how other UK regulators and other nuclear regulators undertake stakeholder surveys, ONR has decided to move to conducting a full survey scale survey on a bi-annual basis but supplement with more bespoke surveys (see future action below) to further help them improve how they regulate.
• ensured the Executive Director of Regulation (EDR) presented to the Board (November 2022 and March 2023) on how ONR will ensure significant improvements in consistency, proportionality and value for money. The EDR highlighted how the adoption of WIReD was providing a consistent platform across regulatory purposes, discussed Executive feedback from Annual Review of Regulation and highlighted how the Regulatory Directorate priorities for the 2023/24 would be risk informed.

As referenced above ONR has recently undertaken a targeted stakeholder survey to   gain a better understanding of stakeholder perceptions of ONR and proportionality and consistency of our regulation. This has indicated that ONR is seen to be generally proportionate and consistent in its regulation and enforcement.  It has given ONR greater detail on where it might focus to generate further improvements and ONR will report to its Board on findings in July 2024.

Recommendation 2 is closed.

Environment of constructive challenge

The PIR report noted that ONR’s inspectors should understand the reasons duty holders may identify a particular approach to compliance and coupled with inspectors’ ability to exercise a significant amount of judgement, this can sometimes lead to differences of opinion / inconsistency in compliance.   ONR places importance on the relationship between duty holders and inspectors to ensure there are opportunities for constructive challenge and to draw out any issues with consistency and proportionality decisions.

Recommendation 1c (specific action):

Attention should be given to how inspectors engage with duty holders to ensure that the power dynamics between parties do not act as a barrier to open conversations around compliance at all levels, allowing an environment of challenge. In addition, ONR should continue to prioritise actions that address real and perceived issues around hierarchy and decision making. Much of ONR’s governance is built around hierarchy which can lead to more junior staff or subject matter experts feeling less confident raising challenge and feedback to seniors, especially if they feel there is less trust in their capability because of their position within the organisation.

ONR has already taken action to address constructive challenge:

Outward Facing Changes

i. Commissioning a bespoke stakeholder survey (referenced in recommendation 1b) that indicates major improvements in stakeholder views of ONR’s proportionality and consistency.

ii. Instituting the Annual Review of Regulation Process referenced above. The 2022 review focused on the specific theme of the relationship between dutyholders and ONR.

iii. Ensuring that at the end of site inspections, ONR inspectors openly discuss their findings with dutyholders to ensure there are no surprises regarding the conclusions and associated findings from the time on site. This can lead to a revision of the report, which happens regularly to ensure that it is balanced and both parties are aligned in understanding and subsequent actions required.

iv. Giving appropriate consideration to differences of opinion, for example:

• Graphite cracking at Hunterston B and Hinkley Point B: Careful assessment of EDF reports on the condition of the graphite cores at Hunterston B and Hinkley Point B had led ONR to conclude that all four reactors were nearing the end of their safe operating life. ONR engaged with EDF ensuring the safe extension of the reactors could be undertaken noting the security of energy supply.
• Over two years, ONR and EDF worked together closely to consider and establish whether there was a basis for a lifetime extension. On completion of this work, EDF and ONR were aligned on their views, which enabled a further two six-month periods of safe operation prior to the closure of the reactors. Working together in an open‑minded manner, enabled a solution on the key issue of graphite cracking and reactor safety that was agreeable to all parties.

v. Having formal, documented procedures in place should a situation arise where a colleague or dutyholder wishes to challenge a regulatory position. The Resolving Differences of Regulatory Opinion is an internal process for colleagues and was last updated in 2022 and has been used in recent years across both nuclear safety and security. Externally, the Decision Review and Appeals Process was last reviewed in January 2023 and complies with the Regulators’ Code and IAEA guidance.

Internal Changes

i. Commissioning Alliance Manchester Business School (AMBS) to conduct an independent culture assessment of their organisation.  Within the report, it was noted that ONR’s enabling regulation approach was appreciated by duty holders (Para 3.2.3.2), and that the approach leads respectful and trusted relationships, facilitating open, transparent conversations and constructive challenge.  AMBS discussions with various duty holders also confirmed that ONR is seen as a fair, open-minded and supportive regulator.  The report however noted that there was an overemphasis on protection of reputation which could have consequences for internal challenge.

ii. Introducing a new inspector training programme focusing on emotional intelligence and how to engage with regulated parties. It is early days, but this is a significant and novel development for a regulatory body in the UK, which will further improve engagements between inspectors and dutyholders.

iii. Encouraging junior colleagues to observe internal meetings of the ONR Board, OET, Regulatory and Corporate Services Leadership Teams. These observers come from all areas and regularly contribute to debate on key topics in these meetings. The ‘Shadow RLT’ has existed for several years, meeting to cover the full RLT agenda, debating papers in advance and representatives attending RLT to provide a diverse input into RLT on important regulatory matters, informing key strategic decision making. The ‘Shadow RLT’ have provided feedback on recruitment and induction processes and how they might be improved, made suggestions for addressing stakeholder feedback, given a steer on the need to provide more leadership opportunities for colleagues in their position and thoughts on specific topics like climate change and its impact on the nuclear industry.

iv. Initiating a professional development programme (IPDP) for newer, graduate inspectors and conducting bi-annual anonymous feedback sessions to learn about their experience and development. As a result of the first round of feedback in 2023 several positive improvements have been implemented including updates to promotion processes and greater clarity on roles and responsibilities for developing inspectors in the IPDP handbook. The programme is now led by an ex-IPDP member who has been through the programme recently and owns the related guidance (which was previously managed by HR).

v. Launching a reverse mentoring scheme in 2022, following a successful pilot in 2021, focussed on helping leaders to see the world through new eyes, benefitting from a broader diversity of insight and experience, bringing new perspective to decision making on key issues.

vi. As a result of the AMBS report, a key focus for ONR is ensuring all four of its stated values are embedded internally (accountable; open minded; fair and supportive)

vii. ONR has an established whistleblowing policy that enables any member of staff to raise concerns about any aspect of ONR’s work.

Going forward, ONR has set out more opportunities for how it will continue to promote constructive challenge:

• Through its new programme, Leading ONR (a series of events, last held in January 2024), ONR is working to support leaders in consistently role modelling accountability, open-mindedness, and fairness.
• Will analyse the results of the bespoke stakeholder survey referenced with segmented results which will identify those sites and worker groups where concerns around power dynamics may be more prevalent.
• ONR has produced a vision statement laying out its aspirations for ONR’s organisational culture. ONR expects this to form the basis of its future initiatives to strengthen its organisational culture and maintain its status as a world-class regulator.  See HR, People and Culture section.

Recommendation 1c is closed.

Suggestions

This theme of the report made one suggestion. ONR’s update is as follows:

Suggestion 26:

• In June 2023 at a Better Regulation Executive-hosted event, ONR shared insights and learning with other UK regulators about how it engages internationally. The Earl of Minto, Minister for Regulatory Reform, cited ONR’s Strategic Framework for International Engagement as an exemplar strategy document that sets out clearly the enablers to effectively engage and influence international standards.
• ONR has allocated dedicated senior resource to look at how ONR can modernise further. They will reach out to a number of other government agencies, including the Better Regulation Executive.

Enabling innovation and future nuclear developments

Overview

The report recognised ONR’s important role in minimising regulatory uncertainty and enabling industry and government to ensure innovation can flourish.  The report noted ONR’s strong progress against actions to promote greater innovation.  ONR committed to the creation of an Innovation Hub to unlock internal and external opportunities for innovation.  This would help ONR to create and promote regulation for innovation, to increase access to ONR expertise for innovators, and ensure lessons learned are shared.

Approach to regulating innovation

Recommendation 11:

The realisation of ONR’s planned Innovation Hub is critical to unlocking internal and external opportunities for innovation and should continue to be prioritised for launch by March 2023. This could build on models used by other regulators such as Ofgem’s ‘fast, frank, feedback’ and the Civil Aviation Authority’s ‘sandbox’, to create an environment where innovation can flourish in line with ONR’s principles and the needs of the nuclear industry.

As the previous Government’s nuclear roadmap set out in January 2024, creating a space in which industry can explore new solutions and ways of working is vital to enabling innovation within the nuclear sector.   The recent IRRS report also notes that innovation to existing technologies and innovative practices will be required to meet our aspirations for civil nuclear.  We aim for an ‘enabling’ regulatory framework to support the safe development and deployment of innovative technologies.

ONR has already:

• Successfully launched its Innovation Hub in early 2022, these efforts by ONR are aimed at minimising regulatory hurdles and encouraging the nuclear industry and its supply chain to adopt innovation solutions where safe and secure, thus creating a thriving environment for innovation.
• ONR’s innovation team, supported by the Environment Agency, completed a ground-breaking pilot sandboxing exercise regulating Artificial Intelligence (AI), via a grant from the Government’s Regulators’ Pioneer Fund (RPF).
  • This project piloted a nuclear regulatory sandbox process, a first for the nuclear sector, using the regulation of artificial intelligence (AI) within the nuclear industry as the test case. Regulatory sandboxing allows industry to explore with regulators how innovation proposals can progress to deployment. It is a safe environment in which new technologies can be considered by the regulator outside normal regulatory interactions.
  • The project contributed to developing a regulatory benchmark for AI, a technology that could have significant safety, security and environmental opportunities and challenges in the nuclear sector.
  • ONR shared its learning from the pilot with the UK Health and Safety Regulators Network Innovation group in September 2023, which ONR continues to Chair. The group will continue to benefit from a future focus on approaches to regulating AI and innovation across a wide range of UK industrial sectors.
• ONR has taken other projects to the Innovation Hub since its inception, for example, the application of blockchain technology and robotics at Sellafield.  Further details are available on ONR’s website.
• ONR has launched a range of services through its innovation hub, including expert panels and regulatory advice, to enable to industry to explore options ahead of formal regulatory processes. ONR continues to develop its own staff to ensure it is ready to regulate innovative solutions as they come forward.

Going forward ONR will:

• Over the next twelve months, through the innovation hub, use the pilot sandboxing exercise experience to deliver additional sandboxing exercises in other areas.
• Also continue to deliver other approaches to enable innovation, including expert panels, innovation cafés and contributing to the DESNZ Medical Radionuclide Innovation R&D Programme. ONR is already benefiting from investing resources in the innovation hub; ONR is engaging with industry earlier in project lifecycles and educating inspectors in the use and regulation of innovative processes and technologies.

DESNZ commends ONR on its hugely successful nuclear regulatory sandbox pilot and looks forward to further projects stemming from ONR’s Innovation Hub.

Recommendation 11 is closed.

Fostering a culture of innovation

The 2022 review team found several examples of successful collaborative approaches to foster innovation taken by ONR and duty holders.  However, several stakeholders questioned whether the status quo was open to challenge, and only 28% of stakeholders in the 2021 survey agreed that ONR enables innovation. On balance, the review team felt for the most part ONR culture was open to innovation but there was an inconsistency in adopting opportunities to unlock innovation, and there was more ONR could do to communicate its approach to innovation to avoid issues of incorrect external perceptions.

Recommendation 12:

To address the latter issue, we recommend ONR continues to improve its external communications on innovation, continuing to champion existing relationships with industry groups and academia, and directly sharing real world examples of ONR’s role in supporting innovative approaches, technologies, and applications through easily accessible means such as a new area of the website dedicated to case studies. This is an ongoing action with any updates to the website to be completed as part of current plans to refresh the website by March 2024.

ONR has already:

• Developed a stakeholder engagement plan which includes improvements in its external communications on innovation, and an innovation strategy that was considered by the regulatory leadership team in January 2024.
• Improved its engagement and communication on innovation through participation in domestic and international external workshops, conferences and seminars. Emphasising ONR is open to considering innovative and novel solutions.
• Featured innovation-related items heavily in the list of ONR’s top external news pieces and social media posts for 2023 and ONR will continue to publicise its outputs via these channels, including ONR reports, guidance and case studies where appropriate. They will also continue to feature in the CNI Annual Report.
• Developed updated content for the ONR website, now live from 25 March 2024. This includes increased clarity around innovation tools and information on how to engage with ONR on innovation. The website will also act as a central repository for information on completed innovation projects.
• Placed innovation at the centre of its 2024 Stakeholder Survey – it is one of the three focus areas (the other areas being the regulation of AI and targeted regulation). Some of the questions to stakeholders include: (i) to what extent are you aware of ONR approaches to regulating innovation? (ii) To what extent would certain ONR approaches to innovation (e.g. formal engagement, provision of regulatory advice, early discussions with innovators) be useful to your organisation? The findings from the stakeholder survey will be fed into additional improvements to the website and a revised stakeholder engagement plan (see recommendation 2 for more details).
• Influenced a positive change in stakeholder views on ONR and innovation since the PIR was completed. Draft survey feedback indicates that ONR is generally seen to be effective at promoting stakeholder networks to develop innovative approaches (66%), and that more than two-thirds (68%) of those who have approached ONR to enquire about innovation agree ONR has enabled the adoption of innovation in industry to help deliver positive outcomes.

Going forward ONR will:

• Continue to engage with industry, government bodies, other UK H&S regulators as well as international partners via the Innovation Hub, to develop ONR’s approach to regulation and to influence the adoption of new technologies and regulatory approaches.
• Continue to build on the success of the sandbox approach by applying it to other new and novel proposals.
• ONR’s senior leaders and their teams will continue to focus on getting the message out to industry and its supply chain that they are open to innovation. ONR is using speaking events, conferences and engagement to reinforce the principles set out in ONR’s Approach to Regulating Innovation.
• ONR will continue to update its website with more case studies on completed innovation projects.

DESNZ is pleased to see part of ONR’s new website is dedicated to innovation case studies.  This currently features the Sellafield deployment of robots and unmanned aerial vehicles to reduce hazard risk reduction through innovative approaches and we look forward to seeing more case studies uploaded.

Recommendation 12 is closed.

Engaging with Innovators

The report noted that by working with a range of organisations who lead the innovation agenda, ONR participates in forums to better understand sector developments and explores what may need to change to support new technologies.  The report cited ONR’s secondment of an inspector to Nuclear Innovation and Research Office (NIRO) which enabled ONR to build good working relationships with innovators and Government.

Recommendation 14:

We recommend ONR explores additional opportunities for secondments by considering exchanges with government and other stakeholders (such as the NAMRC), enabling knowledge and expertise to be shared in a way that develops skills holistically. This must be done in a way which maintains ONR’s integrity and impartiality, including through careful consideration of outside interests. ONR should report to the Board by March 2023 on secondment opportunities and how they will be operated.

Since ONR’s secondment of an inspector to NIRO, ONR has:

• Continued to explore and support secondment opportunities for the purposes of sharing knowledge and expertise, where it is deemed relevant for both parties. For example, ONR has seconded two inspectors to Great British Nuclear (GBN):
  • With the nuclear landscape changing rapidly, including new build ambitions and new technologies, and GBN being government’s chosen delivery vehicle, ONR is keen to play its part by providing early guidance and developing capability on regulatory requirements, which will include for new and novel reactor technologies, without compromising its independence.
  • The secondments are opportunities to promote the reputation of ONR as a highly skilled and competent organisation and for ONR’s inspector cadre to build knowledge of the workings of government from a policy implementation perspective.
  • Other identified benefits to ONR through the GBN secondees include providing a clearer line of communication between both organisations, which can reduce nugatory work as the programme develops, maximise use of resources and identify opportunities for streamlining.
    
    
    1. A Structural Integrity Inspector was seconded to GBN, starting in April 2023 for a period of 15 months. The individual had previously been the lead for Advanced Nuclear Technologies, an area sponsored by DESNZ to grow capability in regulation of advanced nuclear technologies such as small modular reactors (SMRs). With this and wider regulatory experience, the inspector is providing GBN with advice regarding its procurement of SMRs as well as the regulatory requirements for design assessment, licensing and operating SMRs.
       
    2. A Leadership and Management for Safety Inspector was seconded to GBN from December 2023 to support GBN in building knowledge and experience on the attributes needed to build licensable organisations and supporting other initiatives where regulatory perspectives can add value. This will allow ONR to positively influence GBN to build future licensees that are mature to enable the ONR assessment to be more efficiently delivered.
• To address recruitment and retention of suitably skilled and experienced cyber security inspectors, ONR has started to strengthen links with professional bodies such as UK Cyber Security Council, as well as other regulators and technical authorities such as the Information Commissioners Office with the intention of seeking closer collaboration and investigating the potential of secondments. Similar efforts are underway internationally including the development of a Memorandum of Understanding between ONR and ANVS (the Dutch regulator) with the potential for secondments of cyber inspectors in the future.
• ONR has explored how it can support colleagues to fulfil secondments abroad, but the picture is complicated, and decisions are yet to be made.

Going forward:

• The signing of the Memorandum of Cooperation with US and Canadian counterparts in March 2024 means secondments between the three organisations is now a much more realistic prospect, as joint work becomes a reality.
• ONR will develop an overall organisational approach to secondments, including innovation secondments, in the context of its operating environment, and will submit a paper to its Board for consideration by end of Q3 2024-25.

DESNZ supports ONR’s implementation of secondments and welcome further development of a strategic organisational approach to secondment activity, both within and outside the organisation.

Recommendation 14 is closed

Generic Design Assessment

The PIR report noted that despite the ONR refreshment of the GDA process in 2020, there were still concerns from industry that the GDA process took too long (at four years) and risks that new nuclear technology requirements were unique, not understood and would lead to increased costs. 

ONR has worked to streamline the process in recent years. Through funding from DESNZ, work has already been undertaken to further improve the GDA process, building on learning from experience of applying the process in full to a number of reactor designs. A revised process was launched in 2019, introducing greater flexibility. The previous Government’s Civil Nuclear Roadmap, published in January 2024, reflected ONR’s commitment to set out how GDA timescales could be reduced: “subject to the maturity of the technology and design, and the level of comparability between the GDA processes and those of any other well-established regulatory bodies who have assessed and licensed the design against international standards, the timescales for completion of a GDA could potentially be reduced by up to 50%”.

Recommendation 13:

To find further efficiencies, we recommend ONR completes a benchmarking exercise against comparable international regulators by March 2024 at the latest to ensure processes and timescales are commensurate. ONR should continue to support agile learning to ensure it can reflect and learn early, applying improvements to GDAs that may be running in parallel.

ONR confirmed that it would meet this recommendation by carrying out activities in the following four areas, and ONR has already:

(i) Undertaken benchmarking of its process for new design assessment against other international regulators and submitted a position paper to DESNZ in March 2023 setting out the findings of the benchmarking exercise. The review considered the aims and objectives of the process, the standard basis and indicative/typical timescales.  ONR and EA carried out this work to benchmark the GDA process against similar ‘pre-licensing’ processes in other countries, notably the USA and Canada, to ensure consistency with international good practice. The review concluded that expectations and timescales for deployment are broadly equivalent, and the UK was not an outlier.

In response to the British Energy Security Strategy published in April 2022, ONR has undertaken a review of the GDA process, to identify opportunities for acceleration and/or streamlining in order to enable a reduction in the time to commencement of nuclear safety related construction. The review took the following approach:

• Presentation to the Chief Nuclear Inspector’s (CNI) Independent Advisory Panel seeking their views on acceleration.
• Review of previous GDAs considering scope, objectives, outcomes, and timescales;
• Benchmarking of international approaches to NPP build and assessment; and
• Workshop to identify and evaluate options to maximise efficiency of the modernised process.

The main conclusions from the review are summarised below:

• Expectations and timescales for deployment in other countries are broadly similar to the UK, and the UK is not an outlier. However, currently published guidance provides limited information on how work undertaken in other jurisdictions can be leveraged in the UK.
• The modernised GDA process generally provides sufficient flexibility to allow vendors with mature designs, where the associated safety and security justifications are complete, to be able to navigate the process more quickly.
• efforts to accelerate deployment of new nuclear should consider the broader policy, legislative and regulatory framework and a multi-agency approach would be beneficial.

These outcomes informed further work outlined in the below points.

(ii) Published guidance on the use of submissions between regulatory regimes.  This is about exploring opportunities for information exchange and collaborative assessment of specific designs and maximising the value of overseas regulatory assessments of reactor designs that have been undertaken in other countries on designs proposed for Britain.

(iii) Published guidance on the ‘partial scope’ of GDAs. This further guidance is intended to provide further clarity on the flexibility of the modernised GDA process, setting out the differences in requirements between a two-step and three-step GDA, and the expectations on the reactor technology vendors and prospective operators on moving from a two-step GDA to nuclear site licensing, environmental permitting and construction.

(iv) Discussed with DESNZ the proposal to hold an ‘expert panel’ on the acceleration of new nuclear regulation (under ANT Phase 5 work).  ONR and DESNZ agreed that the expert panel may have duplicated with work DESNZ was carrying out during 23-24, but there is potential for DESNZ and ONR to further explore an industry informed review via an expert panel in 2024-25.

In addition, ONR, the Environment Agency (EA) and Natural Resources Wales (NRW) have recently launched a new early regulatory engagement framework for interested parties to deploy nuclear reactor technology in Great Britain.

In March 2024, ONR signed a trilateral Memorandum of Cooperation with the Canadian Nuclear Safety Commission and US Nuclear Regulatory Commission that will enable both good practice and experience of reviewing SMR/AMR designs to be shared between regulators. It is anticipated that this collaboration and sharing will reduce assessment timescales for reactor design assessments.

In April 2024, ONR supported the DESNZ Nuclear Hackathon event which brought together regulators, academics, industry and government to talk about working together to strengthen the regulatory framework to meet the government’s Net Zero ambitions.

Going forward, ONR will:

• continue to be key contributors in various international fora which are considering regulatory collaboration and harmonisation, including realising efficiencies through maximising the value of overseas regulatory assessments of reactor designs that have been undertaken in other countries on designs proposed for Britain and using trusted relationships with mature international regulators to collaborate on and share assessment of reactor designs to minimise burden and timescales where possible.
• continue to capture and apply learning from GDA projects to inform the continuous review of the process and associated guidance as more requesting parties enter the process.
• review the initial roll out of the early regulatory engagement framework to consider opportunities for improvement.

DESNZ acknowledges all ONR has done to streamline the GDA process in recent times and looks forward to closing this recommendation when the two items of guidance have been published.

Recommendation 13 is closed

Suggestions

The 2022 report made one suggestion under this theme.  ONR’s update on progress is as follows:

• ONR’s pro-innovation approach to AI regulation was published in April 2024, this policy paper outlines the strategic approach to the regulation of AI and sets out how ONR will continue to monitor performance against the 2024/25 Corporate Plan.

Annex A: Full list of recommendations

Recommendation 1a: We recommend ONR continues to complete all identified actions in the 2017 NERA report, with an urgent focus on embedding new processes and behaviours as business-as-usual, given the ‘Growth Duty’ came into effect in 2017.

Recommendation 1b: we recommend ONR consider how to addresses concerns around consistency and proportionality in three ways:

• ensure a culture of constructive challenge by addressing real and perceived issues around power dynamics between inspectors and duty holders, and organisational hierarchy and decision making (see para 350)
• review assurance processes to ensure they are robust in resolving consistency issues
• improve the presentation of case studies and guidance to inform how regulation works in practice and ONR’s role in realising outcomes and success

Recommendation 1c (specific action): Attention should be given to how inspectors engage with duty holders to ensure that the power dynamics between parties do not act as a barrier to open conversations around compliance at all levels, allowing an environment of challenge. In addition, ONR should continue to prioritise actions that address real and perceived issues around hierarchy and decision making. Much of ONR’s governance is built around hierarchy which can lead to more junior staff or subject matter experts feeling less confident raising challenge and feedback to seniors, especially if they feel there is less trust in their capability because of their position within the organisation.

Recommendation 2: Using these insights, we recommend the Executive Director of Operations presents to the ONR Board and relevant government departments, by December 2022, on how ONR is ensuring significant improvements in consistency, proportionality, and value for money, across regulatory purposes. Assurance should be provided that planned work is sufficient to drive at least a 10-percentage point increase in stakeholder survey consistency and proportionality ratings by 2025 in line with ONR’s Stakeholder Engagement Strategy 2020-25123 commitments.

Recommendation 3: In addition to the above, to ensure benefits from resources and new systems are maximised, we recommend ONR develops an enduring approach to identifying opportunities and consolidating efficiency across the organisation, with findings reported to the Board at regular intervals. The initial report in financial year 2022/23 should reflect findings from current organisational reviews, and benchmarking of structure, capability and capacity, as well as performance and talent management and business-as-usual project reviews. (See also Value for Money chapter).

Recommendation 4: ONR’s Board is continuing to review the impact of recent organisational changes. In doing so, we recommend the Board consider, by the end of 2022, the resilience of the new structure (and certain roles) against sudden or prolonged, internal or external events that could impact business continuity, and the timely realisation of ongoing projects. ONR should make suggestions for further improvements and share the findings openly with both DESNZ and DWP.

Recommendation 5a: As a part of wider actions on efficiency, we recommend ONR continues to keep paperwork under review, embedding a culture of ‘less is more’ where appropriate.

Recommendation 5b: To improve the efficiency and efficacy of change management and project delivery going forward, we recommend that ONR, by March 2023:

• updates the project mandate template to include a high-level initial analysis of alternative delivery options and articulation of monetised and non-monetised benefits, noting further detail to be included in business cases
• finalises and implements updates to benefits management processes, embedding them throughout the project lifecycle to drive positive behaviours and consistency

Recommendation 6a: We recommend ONR reviews and revises current risk management training by March 2023 to ensure staff understand how to improve risk taking through the implementation of effective risk management techniques.

Recommendation 6b: To embed new behaviours at all levels, we recommend ONR discusses with the Board, by July 2022, how it currently communicates its risk appetite within the organisation, identifying opportunities to improve messaging and highlight how risk will be built into decision making.

Recommendation 6c: To further support ONR in embedding improvements, we recommend ONR commissions a risk maturity analysis by its internal auditors or other external specialists to review risk at a strategic level by March 2023.

Recommendation 7: We recommend DWP and ONR ensure lessons learnt from the past year are embedded at all levels, with a continued focus on efficient and effective ways of working. This should include:

• development of additional guidance alongside the DWP/ONR Framework Document during its 2022 review, to provide a consistent framework within which ONR can prepare and submit business cases and DWP can support approvals, in line with HM Treasury requirements and public funding procedures. This should clearly describe the nature of financing required, how it impacts ONR’s operational delivery, the type of funding available, and the requirements, processes, and timescales for loan approvals
• an assessment of current financing arrangements by March 2023, alongside the consideration of charging arrangements in Recommendation 8, confirming the ‘art of the possible’ within the current framework and any unintended impacts and relevant solutions including legislative change if necessary.

Recommendation 8: We recommend by March 2023 that DESNZ, DWP, and ONR explore the scope for alternative charging arrangements, identifying what can be improved within the current legal framework, and what will require legislative change to current Fees Regulations to realise benefits for ONR and duty holders. This should be considered alongside the recommended assessment of financing arrangements in Recommendation 7.

Recommendation 9: Building on the successful changes made following an internal project management focused review of WIReD, we recommend that a very brief initial (‘fatal flaw’) review be carried out by an external IT delivery specialist by September 2022. By April 2023 the same specialist should be invited to carry out a lessons learnt review. The terms of reference should be focussed on a high-level confirmation of key drivers such as go live, user testing and training procedures and be designed to confirm overall confidence on quality and value for money.

Recommendation 11: The realisation of ONR’s planned Innovation Hub is critical to unlocking internal and external opportunities for innovation and should continue to be prioritised for launch by March 2023. This could build on models used by other regulators such as Ofgem’s ‘fast, frank, feedback’ and the Civil Aviation Authority’s ‘sandbox’, to create an environment where innovation can flourish in line with ONR’s principles and the needs of the nuclear industry.

Recommendation 12: To address the latter issue, we recommend ONR continues to improve its external communications on innovation, continuing to champion existing relationships with industry groups and academia, and directly sharing real world examples of ONR’s role in supporting innovative approaches, technologies, and applications through easily accessible means such as a new area of the website dedicated to case studies. This is an ongoing action with any updates to the website to be completed as part of current plans to refresh the website by March 2024.

Recommendation 13: To find further efficiencies, we recommend ONR completes a benchmarking exercise against comparable international regulators by March 2024 at the latest to ensure processes and timescales are commensurate. ONR should continue to support agile learning to ensure it can reflect and learn early, applying improvements to GDAs that may be running in parallel.

Recommendation 14: We recommend ONR explores additional opportunities for secondments by considering exchanges with government and other stakeholders (such as the NAMRC), enabling knowledge and expertise to be shared in a way that develops skills holistically. This must be done in a way which maintains ONR’s integrity and impartiality, including through careful consideration of outside interests. ONR should report to the Board by March 2023 on secondment opportunities and how they will be operated.

1. The Security NED is a position required by The Energy Act 2013 and has been part of the Board since ONR was formed. ↩

2. NERA Economic Consulting, The economic impact of ONR safety regulation: Final Report, The Office for Nuclear Regulation, 2017. ↩