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Mr. Damian Green (Ashford): It is unusual for such a substantial new clause to be introduced at this late stage of a Bill's passage, so I am grateful to the Minister for kindly explaining privately, in advance of the debate, the purpose of both it and the amendments. However, I have several questions about the need for the new clause and the regulations to which it gives rise. I should be grateful if he would address those when he winds up the debate.

As the Minister explained, the new clause was tabled because it had been discovered that the Environment Agency and many operators of sites did not know that they were operating illegally and had been doing so for some years. I should be grateful if the hon. Gentleman would tell the House when that fact came to light. Why did it take the Environment Agency so long to discover that illegal operation?

What procedures does the agency have to check the validity of licences? Clearly, the House will want to know that this problem will not happen again. Can we be reassured that every existing licence will be covered, and that the operator and the agency have a clear idea of the timetable under which the licence will be operational? Have they set in train some kind of warning system to enable site operators to know when their licences may be about to run out?

Does the Environment Agency have the resources to implement the new system that the new clause and the consequential amendments will produce? Clearly, there has been a failure in the system, but it is more important today for the House to consider how we avoid a similar failure in the future. One of the things that will have to happen if the Environment Agency is not to go down the same route again is to ensure that it has adequate resources to cope.

Mr. James Gray (North Wiltshire): Is my hon. Friend concerned that, under the new regime, the number of sites to be licensed will increase from 2,000 to 6,000, and that many of the 4,000 new sites will be small businesses, farmers and others who may not be all that sophisticated in administrative terms? Is he concerned that they might also fall through the net?

Mr. Green: My hon. Friend makes a good point. The agency must be up to the mark in its existing activity in this area--which it has not been up to now. It will have

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an extra load put upon it by the extra number of sites that will be included. As my hon. Friend rightly says, many of those will be small businesses or farmers who may not be particularly sophisticated in dealing with paperwork. It is all the more important that the Environment Agency knows that it has the system and the resources to cope with the new burden that we will put on it.

Of the 202 licences which have expired, are there any instances where the site operator has, not unreasonably, walked away and shut up shop? He may have thought that the licence had expired and, therefore, that nothing else could happen legally. Are there instances of anyone walking away, leaving a hole to be filled?

The Minister has said that one of the reasons for the new clause and the amendments is to validate past activities. I am not clear from the clause, or from the Minister's helpful letter, whether they also validate the past inactivity of people who may not have fulfilled all their obligations in closing down a site--quite inadvertently. Will those people be liable for prosecution?

My underlying point is the extreme delicacy of introducing retrospective legislation. Clearly, this clause is well intentioned and I accept the Minister's good faith. But however we wrap it up, it is retrospective legislation, and we should tread extremely warily when we go down that route. Will anyone be liable to any fees, penalties or other obligations under the new clause which they would not be subject to were the clause and amendments not to pass? If so, the House should pause at that point.

As a matter of principle, we should be reluctant to endorse retrospective legislation which imposes any new obligations, particularly if, as my hon. Friend the Member for North Wiltshire (Mr. Gray) has pointed out, some of the recipients are small businesses. It is clear from what the Minister said that anyone who has got caught up in this is likely to have been so inadvertently and cannot be blamed.

The new clause makes it clear that it will not affect any criminal proceedings that have been concluded before the Act comes into force. Are there any on-going proceedings that would be affected? Have there been prosecutions for non-compliance with a licence that the Environment Agency and the person operating it wrongly thought to be in force? Has the Minister considered the legal complications involved if someone had apparently not complied with the terms of a licence that had in fact already expired? The Environment Agency would be vulnerable to judicial review.

4.30 pm

Perhaps most importantly, what changes will be made in the Environment Agency to ensure that such a mistake does not happen again? It is clearly embarrassing for all involved that the loophole has emerged. It is serendipitous that the House is proceeding with a Bill that allows that loophole to be closed relatively easily. The Bill and the new clause give extra powers to regulators such as the Environment Agency, and I am sure that the House will want to know that the agency's processes have been improved to ensure that no more loopholes appear.

Mr. Tom Brake (Carshalton and Wallington): I, too, thank the Minister for writing to me in advance explaining

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the reasons for the new clause. It is obvious that the loophole must be closed, so my party will support the new clause. Waste operators must not be allowed to walk away from their responsibilities because of a drafting error.

I am surprised that the loophole was missed. It may be an unfair question to ask the Minister, because he was not responsible, but why were 12 per cent. of the licences simply forgotten about? Did something happen back in 1990 to cause that? As the hon. Member for Ashford (Mr. Green) said, why has it taken so long to identify the problem?

I look forward to the Minister's response to the question about prosecution for inadvertent non- compliance. That is an interesting point. I understand from his office that there have been no cases, but I would like him to confirm that.

Mr. Meale: I am grateful to the hon. Members for Ashford (Mr. Green) and for Carshalton and Wallington (Mr. Brake) for their questions, which clearly need answers before we proceed.

For the benefit of those who do not know the full facts about the number of licences around, the latest figures are that there are 7,353 licences in England and Wales, 202 of which, as the hon. Member for Ashford rightly said, have expired but are being treated as though they were still in force, and 677 of which will expire in the future. That means that 879 licences--12 per cent. of the total, as the hon. Member for Carshalton and Wallington said--will be subject to the effects of the new clause and the amendments. There is no problem with expired licences in Scotland, but there may be some licences--estimated to be fewer than 100--with time limits that may expire in the future.

I was asked about retrospection and whether the new clause would be unfair on businesses. I repeat that it is a criminal offence to dispose of waste without a waste management licence. In cases in which a business has been disposing of waste after the expiry of its licence, the new clause will validate those activities and remove the threat of criminal liability to both the licence holder and to third parties who have transferred waste in good faith.

I was also asked why the loophole has come to light now. It did so because we now have a national body, the Environment Agency, which can identify national issues such as this. Before the establishment of the Environment Agency in April 1996, there were 83 separate waste regulation authorities in England and Wales. As soon as the issue came to light in one of its areas, the agency carried out an urgent review to establish the national scale of the problem. The chairman of the agency informed the Department of the results of that review on 19 May. We considered carefully the implications, and our conclusion was that there was a serious problem that needed to be resolved during the passage of the Bill.

The hon. Member for Ashford also asked about site operators and whether the new clause would mean that they would be able to abandon their sites and walk away from their responsibilities. On the contrary, the purpose of the new clause is to apply the polluter pays principle and, by doing so, to ensure that all licences are subject to provisions under the Environmental Protection Act 1990. Under section 39 of that Act, licence holders must apply to the Environment Agency to surrender their licences.

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The agency is precluded from accepting that surrender unless it is satisfied that environmental pollution or harm to human health is unlikely to occur.

I was asked whether the problem was the Environment Agency's fault. While the Government recognise the difficulties faced by the agency in the past three years, it is a matter of concern to us that the situation arose. We have made those concerns known to the chairman of the agency and it is also our intention to require the agency to review all the affected licences within the next 12 months to ensure that they are all fully up to scratch.

The question was raised of reimbursement of the charges that were levied. We do not agree that that will be necessary, and legal advice obtained from the Environment Agency is that a right to repayment of charges may arise if we do not enact the new clause. I repeat that even though the licences were not in place, the inspection formula was, and all the sites were being examined during the whole period.

I was also asked about prosecutions by the agency in connection with expired licences. We have no uncompleted criminal proceedings and no completed proceedings.

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