BNFL/Magnox merger means axe for 2,000

More than 2,000 nuclear power workers will be made redundant because of a Government decision to merge BNFL with Magnox Electric.

BNFL yesterday confirmed that approximately 10 per cent of the 19,000 workers at the two companies would lose their jobs as the two nuclear de-commissioning companies were brought together. John Battle, the energy minister, yesterday said the Government would transfer its shareholding in Magnox to BNFL, creating "better incentives for securing cost reductions".

Early next year, Magnox will become a wholly owned subsidiary of BNFL and take on the running of BNFL's two Magnox stations at Sellafield, Cumbria and Chapelcross, Scotland.

John Guinness, the chairman of BNFL, insisted the deal was a "win-win- win" for taxpayer, company and Government alike. BNFL would no longer have to pay for Magnox profits. Combined expertise would also give the company a competitive edge in world markets for de-commissioning power stations and fuel, Mr Guinness said.

The Government is scaling down its commitment to pay billions of pounds in subsidy to Magnox for the cost of de-commissioning nuclear power stations, without which the merged company would have been bankrupt.

The Government will still allow the pounds 3.7bn subsidy to rise by 4.5 per cent a year, but will cut out this year's increase, saving pounds 600m. Gradual payments of the subsidy do not begin until 2006. It has also cut out altogether a "letter of comfort", established in 1990, without which Magnox would have been bankrupt owing to a pounds 500m deficit.