Examination of witnesses (Questions 360
- 379)
MONDAY 14 FEBRUARY 2000
RT HON
MICHAEL MEACHER
and MR STEPHEN
TIMMS
360. Obviously in the future.
(Mr Meacher) I do not see how one can make an analysis
of impact when we are talking about the future. Obviously we will
be looking at that extremely carefully and we are consulting with
the industry before the charges are imposed in the first place.
That is exactly what we are asking the Environment Agency to do.
361. In other words, yes, because obviously
you would have to look at the impact?
(Mr Meacher) Yes, of course we will in future. We
will certainly get an idea of the impact of the interim charges.
362. So would you publish that?
(Mr Meacher) I do not see any reason why we should
not, and certainly if you ask Parliamentary Questions we will
try to give you a full and fair answer. The important point is
that we do get experience of the operation of IPPC after April
2001, and that we take account of that in determining how charges
impact.
Mr Todd
363. Would you accept that there is a cultural
difference in the approach of administering EU charge regimes
between this country and its competitors? Essentially we seek
to recover the full cost, or as much of it as we possibly can,
whereas others take a different view.
(Mr Meacher) In our case the Environment Act 1995
requires—requires—the Environment Agency to recover
its regulatory costs. That may not apply in the case of other
Member States.
364. It would appear not, because in the Netherlands
we are told that there will be no charges made for the cost of
administration of permits. In Denmark it has been suggested that
it should be done by local authorities—apparently a course
of action suggested in this country as well—and that that
might cost £1,000 a year. Is this information which is useful
for you in determining your decisions?
(Mr Meacher) I have already said that we have not
asked the Environment Agency, when they pick up these costs, to
take account of charging systems in other Member States.
365. When you say "take account" of
them, what do you mean by that? This country has a habit of taking
account of them and saying, "Yes, we've taken account of
them, they're lower."
(Mr Meacher) This is serious. I am not just meaning
cosmetic. I am saying that we do look at what other costs are,
if there is a significant discrepancy is that justified, and what
is the impact, as you say, competitively on their industry as
opposed to ours? That is a very important question.
366. I am intrigued by this. What justification
could there be for higher charges?
(Mr Meacher) Because, as I have said, the Environment
Act 1995 requires—
367. No, I understand that. I mean other than
that.
(Mr Meacher) That requires the authorities to recover
their regulatory costs.
368. I understand the legal justification that
the previous Act, passed under the last Government, would also
make that a necessary obligation. Setting that aside, what justification
other than the requirement of the 1995 Act is there for a higher
charging regime?
(Mr Meacher) There does not need to be another one.
Perhaps I could just answer this. Our view is that it is reasonable
that the regulatory costs of the authorities should not be borne
by the taxpayer but should, as long as they are fair and kept
to a reasonable minimum, be borne by the industry concerned. We
do not think it right that the taxpayer in general should subsidise
the Agency.
369. Right. So if the rest of Europe took a
different view on this, the British way would be, we believe,
that regulatory costs should be recovered and damn the effects
on the industry?
(Mr Meacher) No, I do not say that and I did not say
that.
370. You nearly did.
(Mr Meacher) No, I did not. I made very clear that
the general rule is that regulatory costs should be recovered.
However, in looking at costs imposed on the agriculture sector—the
horticulture sector which you are talking about of course is outside
IPPC, but in the case of agriculture—it is perfectly reasonable
to look at the competitive effects. If we look at it seriously—and
we intend that the Environment Agency should do so—then
it is for us to take a policy decision as to whether exceptional
measures should be taken in the case of agriculture.
Mr Mitchell
371. In fact, there is not much you can do about
it, because while you could ask, and are asking, the Environment
Agency to charge the absolute minimum possible in these contexts,
unless you are going to repeal the legislation of 1995, passed
by the Conservatives, which requires them to charge the costs
or subsidise those charges, which would be an illegal aid to industry,
there is nothing you can do, is there?
(Mr Meacher) I was certainly not suggesting repealing
the Environment Act 1995. I would not suggest that for a moment.
The only question is whether there might be exceptional reasons
which justified some fiscal support. With a Treasury Minister
sitting next to me, I am not making any commitment.
372. Which you would be unlikely to get accepted
by the Agriculture Commission.
(Mr Meacher) You say that it might be against the
rules over state aids, but you have equally said, as I understood
it, that in the case of Denmark and Holland assistance had been
given which reduced those costs, and presumably that is comparable
with EU state aids.
Mr Todd
373. Can I pursue one last point which is, does
the Scottish Agency operate within the 1995 Act?
(Mr Meacher) No, it is not covered. That is a very
good point.
374. It was not mine.
(Mr Meacher) Environment, of course, is a devolved
issue.
375. But the primary legislation.
(Mr Meacher) I think that whilst all new environmental
legislation has to be approved by the Scottish Parliament, I think
existing measures which were there before devolution continue
to apply, unless the Scottish Parliament changes them. I think
that is correct.
376. You might want to clarify that in your
note.
(Mr Meacher) If I am wrong, I will do so.
Mr Hurst
377. I think the Minister is right. Unless there
is some constitutional change I have missed, like repealing or
amending the Environment Act 1995 requires a two-thirds majority
in every part of the devolved kingdom, it is obviously possible
for you to amend that legislation if you saw fit. Therefore, I
think you have already answered this in part at least. The fact
that it is enshrined in that Act that you have got to charge and
it has got to be a balanced budget is a policy decision which
you are adopting, it is not something which you cannot avoid if
you wished so to do, is it?
(Mr Meacher) Let me make clear, I was not for one
moment suggesting that we are contemplating repeal of the 1995
Environment Act. We are not thinking about that at all. By and
large, I think it is a very good Act. All that you were pressing
on me was as to whether there is a justification for some special
assistance because of the application of regulatory costs in the
case of the agriculture industry in the state it is in at the
present time. You have quoted examples of the Netherlands, Denmark
and Scotland as ways in which that could be done. What I think
I want to say is that this is a matter, in the light of the intensive
work which you have done in this Committee and when you produce
this report, where we should do so.
378. I am grateful for that answer, I will not
pursue it further. The message is coming across, really, that,
in fact, there is a concern that this inequality of treatment
of farmers in different countries is very burdensome on those
in this country. The other point we have heard evidence on is
the cost of both ways forward with regard to the environment,
both the climate change levy and the IPPC. We have heard about
the on-going costs, which I mentioned earlier on, and that, itself,
cuts into the surplus, as it were—if there is such a thing
these days in pig farming and poultry farming—which might
otherwise be used by an enlightened farmer for environmental projects.
Is there a danger because of such strained times, with extra financial
burdens coming upon those growers and producers, whereas in the
past they may have embarked on environmental projects they will
not do so now?
(Mr Meacher) There is, of course, a view which many
people hold in industry, which is, if they did not have to pay
regulatory charges or taxes then they would spend far more on
all of these desirable investments. The evidence, I am afraid,
on that is that that does not happen. If industry put all of the
investment which is justified in cost-effective energy improvement
then we would not require the climate change levy. That has not
happened. I think it is perfectly clear that the classical market,
as Ricardo and others suggested it operates, does not. There does
need to be intervention by government in order to ensure that
industry is as efficient as it could be. The only issue which
you have been raising, and I think it is a very fair point, is
that an industry which is in such a depth of crisis at the present
time may not have the investment capacity which is necessary.
We are talking about 2003/2004, and I did say that best available
technique measures may not have to be introduced immediately but
on a timescale after those dates. I think we should be cautious
about assuming that this crisis is going to continue indefinitely
into the future. It will change, although no one, I think, at
this stage can say exactly when.
(Mr Timms) Can I just add to that in respect of the
climate change levy. I think the question probably goes back to
an issue which Lord Marshall looked at in his original report:
is there a role for an economic instrument in this area and will
that be effective in increasing incentives to reduce and cut emissions?
His conclusion was "yes". That has also been the Government's
view.
379. We have heard evidence from the British
Egg Industry Council suggesting a 100 per cent rebate on the climate
change levy for energy use which is either welfare friendly or,
indeed, reduces the emission of acid gases. Is that a proposal
which the Treasury might consider?
(Mr Timms) I think I commented earlier on the general
issue about 100 per cent exemptions. We have not been attracted
to 100 per cent exemptions because we think it is right that every
firm should have the incentive to reduce energy to conserve energy,
reduce energy usage and so reduce emissions. As you can imagine,
I have had lots of representations from different sectors and
sub sectors saying that for one reason or another it would be
a good idea for them not to have to pay the levy. The view we
have taken in response to all of those is that everybody can make
a contribution here, egg producers included, in reducing emissions.
We have not been attracted to 100 per cent exemptions for that
reason.
Mr Mitchell: Thank you very much. You have indicated
you could give us notes on a couple of items. I perhaps did not
make clear, the Clerk tells me, that what I was asking for on
the consultation process is an indication of the dates of the
consultation process on the quality combined heat and power plants.
That is what I wanted to know. Perhaps we could have the information
you have offered us on that and other issues fairly quickly, as
we want to report fairly soon because we are coming to the end
of our inquiry. I should add that the transcript of the evidence
today will be on the Internet as soon as possible, probably tomorrow.
There is a thrill to come. Thank you very much. It has been an
enlightening and interesting session and a useful elucidation
of the issues, because as a Committee and as individuals we have
been bombarded with questions, arguments and points on these two
sets of charges and a series of counter suggestions as to how
it should be done. I think we have been able to cover that fairly
well today. Thank you very much.
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