Examination of witnesses (Questions 520
- 539)
WEDNESDAY 6 MAY 1998
MR DAVID
DAVIES, MR
IAN STEPHENSON
and MR ROY
HARRISON
Mr Savidge
520. Yes, please, if I could. Did I pick
you up correctly, Mr Davies, you said, in effect, it would be
rather difficult for you to be able to take on board representing
small and medium enterprises?
(Mr Davies) Yes. I think, for the reasons that
I explained, we feel that we can meet one of our principal objectives,
which is to mobilise business opinion, really to establish good
practice in the larger companies and then that percolates down,
in the course of time. To take environmental reporting, for instance,
which is something which we have been very involved in, environmental
reporting, it actually took us, we have been working on that between
ACBE 2 and ACBE 3 over a three-year period, we had extensive discussions
with interested bodies, we had a major seminar in 1994, with participants
across business, and we worked in the City and then we finally
worked with the CBI. So we recognise the need to expand but if
we start with one of our members as the seed corn it percolates
from there.
521. Do you think there would be any value
in actually having an equivalent organisation advising the Government
actually specifically drawn from small and medium enterprise and
perhaps working sort of in parallel with yourselves?
(Mr Davies) One has got to be careful of the proliferation.
My impression, from my work on the Round Table, is that they are
represented there, and perhaps that is the best outlet for them.
I do stress this need for leadership in business, and this is
the reason why we start with a group of senior business leaders,
who are chairmen or chief executives of major companies, for the
most part, and if they can mobilise opinion within their own company
and then their own company set an example for the smaller companies,
that is the way we see it, it is sort of a cascade process. So
I would not have thought it was necessary to have a specific body
to represent or to give the views of SMEs.
522. I do not want to push this point too
far, but it is just that I just wondered to what extent, if small
and medium enterprise companies saw their problems as being very
different from those of the large companies, that might actually
block any sort of cascade process?
(Mr Davies) I think they do, because, obviously,
they are smaller, they have fewer resources available, and the
costs of the work that a bigger company can afford to put behind
some of the working groups would be more difficult for them. So
I think they do have a different agenda, but I think they are,
inevitably, influenced by best practice. We all look to the FTSE
100 companies, the top 100 companies, to set an example, and I
think it is interesting that, I believe, the last time I took
a report on this, it is something like 90 out of the top 100 largest
companies in the UK today have some form of environmental reporting,
and once you have the top 100 companies setting that lead then
it moves down to the next 250 companies and all the way down through.
I think that is the way it works.
Dr Iddon
523. Can I just ask what pressures you are
subject to the most, is it your consumers, i.e. the general public,
or the companies you sell to, that put pressure on you to adopt
correct environmental measures, is it the environmental lobby,
Greenpeace, Friends of the Earth, and the others, is it national
government that puts the most pressure on, or is it just a sense
of leadership within the company, wanting to be seen as a good
company?
(Mr Davies) I think there has been a huge, a huge,
change in thinking in business in the United Kingdom in the last
ten years. If we take, for example, ACBE being formed in 1991,
if we take the Prince of Wales Business Leaders Forum, of which
I am a Deputy Chairman, formed in 1990, as two examples, the attitude
of business leaders has changed dramatically, and the reason for
that is because I think business leaders recognise that environmental
issues are incredibly important strategic drivers for their companies,
and so, therefore, these are issues which do have to be addressed.
Where those pressures have come from is a mixture, it comes from
Government, it comes from consumer points of view, but, whatever
the cause has been, the effect, I think, is fairly dramatic. And
so I think now business leaders see this as a very important issue
which has to be addressed, and if it is not addressed it is going
to work to their disadvantage.
524. Do you think your own employees play
a role, perhaps through the trades union movements?
(Mr Davies) I think it is terribly important.
I talked about a sort of cascade effect from the big companies
down to small companies, I think it is also equally important
to have that cascade effect within the company; it is all very
well for the chairman to have particular views, but unless he
can communicate that to his executive directors and down through
his managers it is going to be wasteful.
525. But is there no bottom-up pressure,
is it all top-down?
(Mr Harrison) I think that, increasingly, particularly
with younger people, they want to work for companies with good
environmentally-aware images, and that is certainly an asset to
a company, in terms of recruitment, to retention.
Chairman: I want to
come on to this question of the adequacy, or otherwise, of Government
consultation, as you see it, and I know Mrs Walley wants to come
in on this.
Joan Walley
526. Yes, thank you, Chair, and I would
like to focus on this whole issue of consultation, if I may. You
have been going for some considerable time and you have had experience
of working for the last year under the current Government and
previously. I just wonder if you could tell the Committee how
you think at present there could be improvements, as far as consultation
with Government is concerned, what are the gaps, what would you
like to see by way of improvements?
(Mr Davies) I think the whole issue of consultation
is absolutely vital to the success of ACBE, and I think I would
characterise ACBE as being a sounding-board between Government
and business, and possibly, as another analogy, being a test-bed
for ideas at an early stage. It is terribly important within ACBE,
we consider it important, that we should be in at a very early
stage and that, rather than to have formal consultation, we should
have an opportunity to provide meaningful dialogue between business
and Government at a very early stage of whatever the particular
issue might be. If we take the work we have done on Climate Change
as an example, which I think has perhaps taken up most of our
effort, along with transport, which is a very related issue, in
the last six months, I suppose what I would say is that the target,
the aim, which was announced by the British Government, to reduce
CO2 by 20 per cent, I think if we had had consultation
before that target was set, rather than after, that might have
been helpful. That target was established, and since then we have
had, I think, terrific consultation with Government, I think Government
has come to us and sort of said, "Well, we do have these
targets, we do have these objectives, they are being established
in Kyoto by the European Union at the present moment; now what
can business do to help us to achieve this?" And that process,
which began at the end of last year, moved on into a seminar,
which was attended by the Prime Minister and by his senior colleagues
at Number 10 Downing Street, before the Kyoto Conference; that
then expanded into five working groups, to help develop thinking;
has come into a report which we published about one month ago;
that will then go to a seminar at the end of May; and then we
will come back and obviously look at the papers that were produced
by Government in the summer. So that whole process of consultation,
I think, has been excellent. You asked me, I am taking that as
an example, where it could have been improved; if we had come
in before that 20 per cent target had been established in the
first place, that might have been a good idea.
527. Can I put it to you that we have had
evidence from the Institute of Directors, which I do not think
you could have seen, which says, "We're not being consulted
by Government; we were asked to send in our submissions in respect
of the various consultation documents that are out, but these
are much too vague for us to really be able to actually send comments
in." So is there not a bit of a tension between being involved
at the very kind of formative stage of policy and actually having
an input in that, in order to be inclusive in the way Government
then develops its policies, and then the more fine-tune efforts
in respect of, I suppose, implementing those policies? When you
have got the Institute of Directors saying it is much too vague
to be involved in this wider consultation. Do you have to have
something actually on the table to be able to discuss, or, in
respect of, say, Climate Change or transport policy, do you see
yourselves as being part of the solution of actually addressing
the problems that the country faces?
(Mr Davies) I talked a bit about Climate Change,
would you like to talk about transport?
(Mr Harrison) Certainly. ACBE were involved at
a reasonably late stage in the Integrated Transport debate, but
I do not believe that industry could complain about its advance
warning or ability to communicate with Government. Consultation
papers were issued and trade associations, CBI, all took part
in preparing their own briefs on this particular issue. We were
asked to do, probably at the eighth hour, some work, which I think
we took good advantage of. My view, I think, is that the feedback,
in terms of our input, could probably be improved on. It is always
better to close the loop so that people understand what has and
what has not been accepted and why.
Chairman
528. And yet the Institute of Directors,
in its memorandum to us, said, under the heading, we asked them
what approach had been taken by Government to consult business
on new environmental policies which had a significant effect on
the environment, such as the UK Strategy for Sustainable Development,
and the Integrated Transport Strategy; the IOD has not been consulted
yet on most of the issues mentioned above, and just felt that
the consultative process was very hard to respond to because it
was so general. There were some vague generalisations put forward
by Government, and the Institute of Directors are saying, what
do you make of these; they are so general, you can almost say
anything. So they were critical, and they remain critical, they
say, is Government consulting at the right stage, is it giving
us concrete things we can react to, and also, in some cases, it
does not appear to be consulting at all very satisfactorily. They
singled out the Packaging Waste Regulations as a chaotic piece
of non-consultation. So there is, quite clearly, a lot of view
in industry that they are not doing it properly. I do not know
how you react to that?
(Mr Davies) Coming back to a question that was
asked earlier, about the topics and how we agree the topics, I
think there are two aspects to this. One is the general topic,
which might be environmental reporting, it might be Climate Change,
these are huge topics which require a tremendous amount of input,
and, certainly, in our case, have taken several years. I think,
in both of those, we did get in pretty early. Now we do also find
that there are specific topics which Government will come along
to us, which are not perhaps on our agenda at the beginning of
the year, and they will say, "Look, could we have a very
quick view from you on this?" An example of that was the
landfill tax, I think that is right, Ian, was it not?
(Mr Stephenson) Yes, that is right.
(Mr Davies) Another example was diesel, pure,
and perhaps the most important one was the Climate Change discussions
before Kyoto, where I think Government is looking for a very quick
reaction from business, and because we are a small body we can
mobilise pretty quickly, and, I think, as long as we are flexible
enough to be able to put together a working group to attend to
that,——
529. Do you think what is happening here
is that they are consulting you, as you say, but as a substitute
for more direct consultations with specific representations of
industry, like the Federation of Small Businesses, or the Institute
of Directors, or whatever; that is where the criticism of their
consultation is coming from, and maybe they are using you as a
substitute for these more direct consultations which are not so
good?
(Mr Harrison) Certainly, from the point of view
of my industry trade associations, there has been a considerable
amount of dialogue on relevant issues since we have had this new
administration, almost to a point of being refreshing in a willingness
to listen to industry's point of view. Clearly, they are trying
to deal with a lot of issues in a very short time-frame.
Joan Walley
530. Can I just come back, in terms of what
you were saying about the 20 per cent targets, and you said that
you had not been consulted before the Government came up with
them; had you been consulted before we announced the 20 per cent
targets, what would you have actually said and contributed?
(Mr Davies) I do not know. I would be misleading
you if I tried to give you an answer.
531. Can I just follow that up, because
we have got a newspaper article here, which says that you have
welcomed what Bill Clinton has done in America, in terms of his
promise to spend £3.5 billion on subsidies for energy efficiency
and renewables, which is obviously, if you like, one step farther
on from setting 20 per cent targets. Do you feel, in terms of
the consultation, the two-way process that you have with Government,
that you are in a position where you can actually put forward,
if you like, proposals which, there again, may have some effect
on vested interests which might be represented by other members
of your Committee?
(Mr Davies) Yes. I think that comes out in the
report on Climate Change, you have a copy of that. In our report
there is a series of recommendations about what we feel should
be undertaken by Government, and they relate to voluntary agreements,
they relate to negotiated agreements, they relate to regulation,
economic instruments, we even talked about a carbon tax, which
I think is reported in that note that you have, trading, joint
implementation, CHP, we even talked about nuclear power, but at
the end we did come to technology and research and we did say
that we felt, the American view of this is rather different from
the British view, it seems, industry-wise. The American view are
saying that industry should be able to expand its abilities, in
order to meet the requirements that the US Government is going
to sign up to, and in that regard this is the reference to the
Clinton administration putting forward this large amount of money,
in terms of supporting technology and research. We drew attention
to that and I think that is what Leyla Boulton [of the Financial
Times] picked up, and we did end up by saying ACBE recommends
that a business-led Climate Technology Co-ordination Centre be
set up to co-ordinate research and assist in commercial exploitation
of new technologies. So, in Climate Change, for instance, we sort
of see this as a very large package of measures, and that is one.
532. Can I just finally ask you, in our
previous report, this Committee has actually recommended the setting
up of a green tax commission, which could investigate, if you
like, in detail, the practicality of perhaps future taxes which
might help this whole environmental agenda. Do you have any views
of that kind of a commission which could help further this two-way
dialogue and consultation and ease problems before they come on
board, on the horizon?
(Mr Davies) We have talked specifically about
taxes. I think the first time we made a recommendation was the
landfill tax and I think that was quite a watershed for ACBE,
but there were some very specific caveats about the landfill
tax. And, coming back actually to your question of consultation,
I think that was a very good example, and that was the previous
administration, of Government coming back, because we put forward
our thoughts and they actually came back and they talked it through
with us and they did make certain amendments; so that was a specific
tax which we looked at. We have given some thoughts about a carbon
tax, in Climate Change, but, again, we have put some very specific
caveats there, in terms of competitiveness and that the
burden should not fall unfairly on business and that it should
be motivated by behavioural change and, in terms of process, should
be fully recyclable. So we have made those views known. As far
as green tax is concerned, we have made no specific views on that
and we have not taken a view on a green tax commission, for instance,
and we believe that this is really a Government issue and not
ACBE.
Dr Iddon
533. I have got the Institute of Directors'
memorandum here and they were rather scathing on Government about
the consultation over Producer Responsibility (Packaging Waste)
Regulations, which the DETR are reviewing at the moment; in fact,
they said: "We were contacted by the Better Regulation Task
Force but only, it transpired, to supply names of scrap metal
merchants rather than to survey our members!" And they go
on to say that Government seems to consult businesses who agree
with their own standpoint, and, very often, that these businesses
are in the consultation process to develop policies with Government
in order to damage their own competitors. That is the Institute
of Directors speaking. Do you subscribe to that, or do you have
any criticism of what they are saying?
(Mr Davies) I find that a difficult one to respond
to. I think ACBE 2 did do some work on that, we have certainly
done nothing in ACBE 3; that does raise the issue about the continuation
of ACBE work on work that has been done previously. I personally
cannot really give any comment about that. I am not actually a
member of the Institute of Directors, to be honest, and so I am
not particularly aware of it, so, I am afraid, I can look into
and give you an answer, if you would like me to, but I am not
really able to say anything at this meeting.
Mr Savidge
534. I do sort of notice the contrast with
comments Mr Harrison was making earlier, that seemed to be suggesting
that he had found a feeling in business that in the last 12 months,
or so, there had been a considerable increase in consultation;
even though, obviously, Government is moving reasonably fast,
there are going to be some things where that is not going to be
satisfactory. Did I gather your opinion correctly there, Mr Harrison?
(Mr Harrison) You did, yes.
535. And would that be a general consensus
feeling, perhaps?
(Mr Davies) I would agree with that, certainly,
yes, I am sure my Committee would.
(Mr Harrison) I think, if you return to the green
tax issue, as it related to the transport exercise that we carried
through, that in each of our recommendations we are looking at
balanced solutions, which include taxation, which include regulation,
which include voluntary agreements, in order to get to an acceptable
solution, and the concern is that green taxation is seen as an
easy fix, not necessarily by DETR but certainly by the Treasury.
Dr Iddon
536. We have mentioned quite a lot of areas
this morning which are rather obvious, transport, landfill tax,
where there has been quite a lot of dialogue, but are you aware
of any significant areas of Government policy where you do not
think that you have been significantly involved at this stage,
are there any particular concerns that you think should be addressed?
(Mr Stephenson) I do not think so. I think there
are areas where we do not have confidence, and that is things
like genetically-modified organisms, and there is a vast range
of other areas which are of critical importance to the Government,
and I think ACBE, on those occasions, defers to other, more expert
groups. My view is that there is a lot going on in Government
at the moment, there are a lot of consultation documents coming
up, and certainly they are coming in our direction, I am certainly
aware that they are going in the direction of the trade associations
that we are involved with. So I am a little bit perplexed about
some of the comments that the IOD are making. But I am not aware
that there is anything that we have missed, particularly; we review
the work programme every year and look at the forward programme
and the key issues where ACBE can actually make a contribution.
(Mr Davies) We are very specific, we are not big
enough, we do not have the resources to be able to speak generally
about a whole range of matters, we are very specific, we establish
the agenda, we are occasionally prepared to accept a new topic,
if it is of particular topicality.
Chairman
537. You have to be very selective, in other
words?
(Mr Davies) We have to be very selective, yes;
we are only 15 people.
Chairman: I understand.
We want to come on to the question of the sort of targets which
Government is setting and their impact on the business sector,
and the regulation and the impact on the business sector. I know
Mr Dafis wants to ask some questions on this point.
Mr Dafis
538. Thank you, Mr Chairman. You spoke earlier
about the very big change of culture that you reckon has occurred
in the business community in the last ten years, and it is interesting
to see that there is very strong support in companies for taking
action on environmental matters in advance of regulation. So I
was wondering whether you reckon that is true, to what extent
actually is that happening, to what extent do businesses actually
take action in advance of regulation, and to what extent they
do that, and why they do that, what is it do you think that makes
companies act, even when regulation has not yet come on the agenda?
(Mr Davies) I think this is very much in the context
of the work that we have done on shareholder dialogue and that
it is in the best interests of companies to recognise at an early
stage specific environmental issues which could cause problems
at a later stage. This work that we did grew out of Brent Spar,
and when that awful tragedy occurred, out of the blue, everybody
sort of said how could this have happened, where did it come from,
why had not a particular company taken better measures to deal
with a problem like this; and it was really out of that work that
we set up a large seminar, which was attended by a large number
of companies, to promote a standard whereby one would be transparent
and open and accelerated.
539. When was that?
(Mr Davies) Brent Spar was, what, three years
ago.
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