MONDAY 14 FEBRUARY 2000
_________
Members present:
Mr David Borrow
Mr David Curry
Mr David Drew
Mr Alan Hurst
Mr Michael Jack
Mr Paul Marsden
Mr Austin Mitchell
Mr Lembit Opik
Mr Mark Todd
In the absence of the Chairman, Mr Mitchell was called to the Chair
_________
MEMORANDUM SUBMITTED BY THE ENVIRONMENT AGENCY
EXAMINATION OF WITNESSES
DR PAUL LEINSTER, Director of Environmental Protection, MR NIGEL READER,
Director of Finance, DR MARK KIBBLEWHITE, Head of Land Quality,
Environment Agency, examined.
Mr Mitchell
141. Welcome, gentlemen. It is good to know you have such a huge
fan club travelling around with you. There is an enormous interest in this
topic, as you can see from the scale of the attendance behind you. We want
to try to finish by 5 o'clock. Can I ask you to start us off by introducing
yourselves and then we will start the questioning?
(Dr Leinster) My name is Dr Paul Leinster, I am Director of
Environmental Protection. On my left is Mr Nigel Reader, who is Director of
Finance, and on my right is Dr Mark Kibblewhite, who is Head of Land Quality.
142. Can I begin with the specific application of the pollution
controls to agriculture? What are the specific problems of applying this to
agriculture and how do they differ from other industries?
(Dr Kibblewhite) Let me first of all give you a little bit of
information about air-borne emissions. The most important release from pig
and poultry units is ammonia, and the pig and poultry industry represents a
substantial proportion of the 80 per cent of ammonia emissions which are made
up from agriculture in the United Kingdom. Ammonia contains nitrogen, of
course, and the ammonia that is released is returned eventually to the land
and so increases nitrogen depositions and this contributes to acidification,
damage to heathland and in some cases it might contribute also to damage to
aquatic habitats. That is air-borne pollution. Regarding water pollution and
pollution to land, the most important arising from these industries is of
course slurry and livestock manure. This, of course, goes to land and when
it goes to land it carries with it nitrogen and prosperous, both important
nutrients for the biological cycle on which agriculture is based, so that in
itself is good. However, because the ratios, the relative quantities of
nitrogen and phosphorous are not perfectly matched to that which is needed on
the land, even if we control nitrogen we still have a problem with excess
phosphorous. So taking all these things together, if we are not able to
control these slurry and livestock manure applications to land in a proper and
effective way, then there is a serious risk that we can do damage to water
courses and to the wider environment. I think that is probably sufficient;
those are the two big things.
143. Does the inspection and control of this pose different
problems for you? Are the kind of inspection and control structures you have
which apply to industry going to be very different for agriculture?
(Dr Leinster) Just some background in terms of how we have been looking
at implementing IPPC in the round and also within agriculture in particular:
we have had within the Agency a project team which has been looking at the
implementation of IPPC and that team has been in place for just around two
years now. The project team has a number of working groups looking at various
aspects including how we are going to implement these regulations when they
come in in the intensive pig and poultry sectors. We are developing systems
and approaches which are proportionate to the environmental risks and impact
on the various sectors. We are also within the Agency sensitive to the
concerns of the agriculture sector and recognise the current economic
difficulties which many farmers and many parts of the industry are suffering
just now. We also have significant experience of working with farmers so we
have ensured that our frontline staff who interface with farmers understand
farming, and when we come to IPPC we will be recruiting staff ---
Mr Curry: The verb you are struggling for is "meet" I think.
Mr Jack
144. "Interface", does that mean "meet" with farmers?
(Dr Leinster) Interactions and when they have discussions, because it
is not just meeting in terms of meeting on the farm, we also are having
working groups with the National Farmers' Union, we are also meeting with the
pig and poultry industries to develop ways that we can take forward the
regulation of those industries.
Mr Mitchell
145. Are you going to set up a separate department dealing with
agriculture; a separate section?
(Dr Leinster) We will have specialists who will concentrate on
agriculture; there will not be a separate department. We already have within
head office, headed up by Mark, a sector group which is now industry-facing
and is a sector group specifically for agriculture. In terms of looking at
IPPC, we have had a number of meetings with the pig and poultry industry
looking at how we are going to implement IPPC within those sectors. So we are
having these discussions, they are on-going. One of the things we are looking
at, for example, is the application of general binding rules as a means of
taking forward regulation within those sectors. We are also interfacing and
working with Europe. There is the process which is the development of best
available techniques reference documents, which are European-wide agreements
as to what are the common best available techniques for the control of
pollutants within Europe within these industries. We are actively involved
along with MAFF in those discussions.
146. Is this going to change how you work now with agriculture?
How do you work now with agriculture and is it going to change?
(Dr Leinster) For example, we do work on things like the nitrate
vulnerable zones and in the work we undertake on the nitrate vulnerable zones
the people who are employed to work and to meet the farmers and to discuss
with the farmers do have farming backgrounds.
147. And those same people will be working on IPPC?
(Dr Leinster) Those or similar. We will require some more.
Mr Jack
148. Just to clarify something in my mind, the IPPC does not cover
the livestock sector, as I understand it, and I was intrigued because people
in pig and poultry seem to feel that livestock producers produce more dung and
muck and ammonia than they do. How was it that livestock escaped from this
proposal?
(Dr Kibblewhite) This is history, if I may say so. The IPPC Directive
is in place and it did not include the dairy industry for example, it only
included pig and poultry. That is how it is. How that was arrived at, I
could not myself say.
Mr Mitchell
149. It is not correct to say that the French wanted to include
pig and poultry?
(Dr Kibblewhite) I have no knowledge whether it was the French or
others.
Mr Jack
150. Perhaps at some point in your discourse you could tell us how
this measure would apply to a mixed farm which has poultry, pigs and
livestock.
(Dr Leinster) It will depend upon thresholds. So if the thresholds,
which are 40,000 places for poultry, 2,000 places for pigs or 750 places for
sows, are exceeded on a mixed farm, then those particular activities to do
with the pigs or the poultry, if they exceed those thresholds, will be
included. The others will not.
Mr Opik
151. What is the difference between a holding and an installation?
(Dr Kibblewhite) A holding, as I understand it, is a unit that is
currently used by the Ministry of Agriculture, Fisheries and Food. To
illustrate, a holding could have on it more than one set of pig units
operating independently but within the same business. Those would be two
installations if they did separate activities which did not connect to each
other.
152. So installation is the crucial word rather than holdings?
(Dr Kibblewhite) Correct. When we are talking about an installation,
an installation has to encompass all the activities which form the total
process of producing pig or poultry outputs.
153. So it is possible to have more than one installation under
the IPPC rules and definitions given the thresholds you have got, so the
thresholds are everything in terms of defining these?
(Dr Kibblewhite) That is correct, but within a single holding there
could be more than one unit which would form more than one installation.
154. What happens if the total number of places is in excess above
the holding but not for any particular installation, they are still handled
individually?
(Dr Leinster) It is the installations which are the key, and the
thresholds apply to the installations.
155. You have stated that you think there is an under-estimate
because of that distinction, what do you think is the most reliable estimate
you can give of the number of installations in that case affected by the IPPC?
(Dr Kibblewhite) I think our estimates have to rely very much on the
information we are able to get from the Ministry of Agriculture, Fisheries and
Food, but we have not the resources to go to every holding and check on this
point. So, in short, I think our estimates could vary anything between a
factor of 1.1 and 1.3 of the number of holdings.
156. I congratulate you on taking the risk of guessing. Moving
on, the NFU in Scotland have told us that some farmers have to pay two charges
because the handling of feed and dung (?) are considered as separate
activities from the rest of the running of the livestock unit. Is that right?
(Dr Kibblewhite) I cannot speak for Scotland, however, it goes back to
the definition of the installation and certainly if the mixing and preparation
of feed forms part of the activities which make up the process, that will be
included within the installation, so we would not have an installation
necessarily that is a feed-producing installation followed by the production
unit itself, unless of course the feed installation was indeed a completely
separate entity.
157. What would make it a completely separate entity?
(Dr Kibblewhite) It would not be there to provide the feed into the
installation itself, but to provide a facility for mixing and preparing feed
for a number of installations.
158. I will not go further with this but am I right in assuming
there is a grey area in that case?
(Dr Kibblewhite) I think there are areas for careful thought and
certainly our approach to IPPC is more based on the idea of having some
principles and some guides than to have absolute rules, because the nature of
these installations and indeed other IPPC ones is such that you need to have
that flexibility.
159. Since all my farmers unquestionably read all the transcripts
from this Committee, you should know what they are all going to do on the
basis of what you have just said. Moving on, how many farmers do you think
will be affected by that distinction? You may not have the answer.
(Dr Kibblewhite) I do not know the answer.
160. What regulations apply to those installations which have
fewer than the 750 sow places, 2,000 places for growing pigs under the 30 kg
limit?
(Dr Kibblewhite) They will remain in the same condition and
surveillance as they currently do. In other words, for example, there would
be no controls on ammonia emissions, there would be no controls or
possibilities for managing slurry and livestock manure applications to fields.
Obviously, if there is a pollution incident - and we had some 2,000 of those
from agriculture last year - then there is potential for certainly a
reportable incident, maybe a prosecution, but they would be outside the
framework.
161. What about other livestock which is not covered by the IPPC,
are there any changes there?
(Dr Kibblewhite) Not that we are able to detect.
(Dr Leinster) No.
Mr Curry
162. Does an installation have a legal identity or a physical
identity?
(Dr Kibblewhite) It is, I think, more a legal entity than a physical
entity.
163. So that if my wife and I, for the sake of argument, at the
moment are farming something which has got 1,400 sow places, and we then
divide that into two companies so we have 700 each, do we fall below your
threshold?
(Dr Kibblewhite) That would depend whether you had separated all the
activities or not. If you had managed to separate the activities completely,
you would then have two installations, both falling below the threshold. But
if you kept the activities combined and the process was indeed just one, then
the legal definition, as I understand it, would remain.
164. If I put them back-to-back so they were on opposite sides of
a track down the middle, how would you define the separation which would need
to take place? Could I draw my rations from one place or not?
(Dr Kibblewhite) I do not think it is a matter of physical separation,
so even if there is no road there is likely to be perhaps a path and the
important thing is, are the material flows in the process moving between those
different units.
Mr Mitchell: Your divorce settlement is going to have to be very
carefully drawn up!
Mr Jack
165. Can I take you back to coverage and ask you a bit more about
the joint enterprises which may have, in addition to pigs and poultry,
livestock? I gather you have to look at the whole of the entity in terms of
its emissions in the work you are doing, and if somebody has got some kind of
integrated waste disposal system, so that waste from all these enterprises
went in together, and you are having to make some kind of judgment on what is
an appropriate handling system, I am completely lost as to how you are going
to apportion out your judgments on these matters between the different
entities. Help me do the practicalities of how it will work in real life.
(Dr Leinster) If the waste handling is technically connected to the
installation so there is material flowing through and then it becomes a
combined waste handling unit, we will then apply controls to that waste
handling unit and ensure there are adequate controls. However, I think some
of the questions which are now being asked in detail are still the sort of
questions which we are discussing in detail with the pig and poultry industry
at this present time, so we can understand how these sorts of issues would be
resolved.
Mr Curry
166. You had better hurry up as far as the pig industry is
concerned.
(Dr Leinster) This is a new area of regulation. It is important I think
that we get this right so we need these detailed discussions on exactly these
sort of issues; what do you do "if". We are doing a lot of, "What do you do
'if'", and we are doing that with the technical representatives of the pig and
poultry industry. We are also dealing with these discussions within Europe
so we have a common understanding in Europe of how they are dealing with it
as well. Just so you know, the BAT reference document for pig and poultry
will be available hopefully later this month, or within a month's time, so the
European-wide BAT reference document will be available within about a month's
time. That will also be describing some of these issues. So I think it is
too early for us to be able to say here how we would resolve some of those,
but they are being dealt with.
Mr Jack
167. But the reality is and what you are saying is that the
livestock sector, which is expressly outside the IPPC regulations, could in
fact find itself affected as part of your more general considerations about
which presently you cannot be more specific?
(Dr Leinster) Yes.
(Dr Kibblewhite) I think to some extent that must be true, but let us
also recall that we already have the existing statute - the silage, slurry and
oil regulations - which requires certain things to be done in terms of waste
management in slurry sources and so on. So I am not convinced really that
there is a lot more incremental burden being placed on the wider livestock
industry.
Mr Drew
168. Moving on to the IPPC requirements, as someone who sat in on
the Bill I know we looked at how this would begin to work in practice, and
obviously you have this objective to achieve integrated prevention and control
of pollution arising from a fairly wide range of activities and if at all
practicable to reduce emission levels at the moment. Can you paint me a
picture of what a farmer who comes under the auspices of IPPC regulations will
have to conform to?
(Dr Kibblewhite) The whole basis of this reform is one of proper and
proportionate management of environmental risk. So the very first thing is
to have a proper management plan so that all of the different processes which
can produce an environmental risk are managed. Clearly that management plan
needs to be sufficient to do the task but no more, so we are not asking ---
169. So it is up to the farmer to produce that management plan?
(Dr Kibblewhite) Yes.
170. And you will give them clear guidelines on what is expected
in that management plan or will they come with their ideas?
(Dr Leinster) This is one of the areas, for example, where we are
looking at general binding rules. General binding rules are a standardised
approach which can be applied to the management of these key environmental
impacts. The important thing is that you start from what are the key
environmental impacts from a particular activity, then what are the
appropriate controls you should introduce to manage those impacts and that is
what the whole process is about. By using general binding rules, you are able
to come up with common solutions which can be applied throughout all
industries where you have similar installations. We are working, as I say,
very closely with the industry doing this at the present time and things are
moving on apace and if we can get general binding rules in then the industry
will know very clearly what they need to do. There will be a list of things
that they need to go through. For example, it could be measures such as
covers on slurry tanks to reduce ammonia emissions, it could be to do with
manure handling techniques, to look at diet controls to reduce ammonia
production, so we would look at specific items which can be used by all
farmers to control these emissions. So they will have very clear guidance.
The BAT reference documents will provide the underlying guidance which will
be used European-wide in terms of controlling these impacts. We will
translate that in the UK into UK-based guidance - well, England and Wales.
We are working closely with the Scottish Environmental Protection Agency as
well in coming up with a common application procedure for applying these
regulations as well. So there will be clear guidance.
171. Are we talking here about the permits which will be given and
the requirements which come on the back of those permits for the pig and
poultry holders? The examples you have given there are typical of what you
would expect them to include?
(Dr Leinster) Yes.
172. We have obviously received a lot of correspondence on this
matter and are doing our own investigation for which you are here today. The
National Farmers Union of Scotland is very concerned about the monitoring
process and indeed the cost of the monitoring equipment. Are you expecting
the farmers themselves to pay for that monitoring equipment and, if so, what
would that cost be?
(Dr Kibblewhite) Let us first of all say that the reality is that to
monitor all these farms in detail in a complete way is not a feasible option.
So a lot of the monitoring will be done I am sure by proxy, in other words,
materials coming in will give us an emission at this level. So the controls
will more be by the way things are done than by the monitoring itself. Some
monitoring may be needed but, for example, if there is already perhaps a meter
which gives an indication of air movement or tank volumes then that is very
useful information. Certainly I do not think we have in mind very, very
expensive at-the-fence, over-the-fence, monitoring for ammonia and other
species, I think that is not actually proportionate to the problem we are
trying to solve.
173. But if a farmer has a problem and they fall foul of the
Environment Agency, could it be that you will suggest that they will need to
monitor their emissions as a way of making sure they are not breaking the law,
and what will be the implication thereof?
(Dr Leinster) Unlikely on an on-going basis. We are looking at
assessing the impact of the emissions from the pig and poultry industry, and
the way we are looking at doing that just now is through calculation and
emission factors. If, however, there was a particular nuisance factor or
there was a nuisance incident being caused by a particular farm, then there
may be a certain amount of monitoring carried out to assess that problem. But
we would hope the problem would be resolved and, once resolved, there would
not then be a requirement for on-going monitoring.
Mr Mitchell
174. Would the farmers pay for that?
(Dr Leinster) Yes, they would.
Mr Drew
175. What happens when you get a particular complaint about a farm
from an interested individual or an organisation; what would be the procedures
then?
(Dr Leinster) We would go out, we would investigate, we would see
whether the farm was the cause of the complaint and, if it was the cause of
the complaint, we would determine what action needed to be carried out to
remedy the situation. That is exactly similar to the situation which we have
just now where we do get complaints, or for odour the local authorities would
get complaints because odour smell and odour noise are already captured under
nuisance conditions which the local authority currently regulates. So those
aspects of it will be no different. There will be a checking up and remedial
action taken.
Mr Jack
176. I am going to ask you some questions about the evaluation
which you have been making about the costs which are involved in the
implementation of the IPPC Directive. Before I do go to that, so that I
completely understand, at the heart of this exercise is the introduction of
a permit system which, as I understand it, will specify certain factors in
relation to emissions from a given holding. Is that permit system part of the
Directive? In other words, is it specified in there that it says that when
it is implemented in a Member State there will be a permit?
(Dr Leinster) Yes.
177. So there is no getting away from that?
(Dr Leinster) No.
178. Is the permit defined in terms of what it will cover, in such
terms that all the things you are investigating are laid down there in fine
detail?
(Dr Leinster) Yes.
179. So permits are an inescapable fact of life?
(Dr Leinster) Yes.
180. So what assessment have you made so far in terms of looking
at the overall cost to the agriculture industry of the implementation of these
proposals?
(Mr Reader) If I may answer that question, both the DETR and MAFF of
course have undertaken regulatory impact assessment studies, DETR in their
fourth consultation document last August. Three broad areas of cost were
identified - preparing the application, the Agency's charges and investment
and cost to ensure compliance - and also the benefits were assessed in terms
of environmental improvement, but both, I have to say, in fairly general
terms.
181. So you could not say, if I asked you the next question as to
how much under each one of those has been given a figure?
(Mr Reader) I think there are some preliminary numbers which are set
out in the regulatory impact assessment prepared by the DETR - I think.
182. Pig and poultry farmers would be very interested to know how
much a pig and how much a hen at this stage. Are we at that level or not?
(Mr Reader) No, we are not.
183. So we have got no idea?
(Mr Reader) No.
Mr Mitchell: Let us come to the detailed charges later.
Mr Jack
184. Give me a feeling of how you have consulted with the industry
on this. How many mechanisms are there? Who has been involved?
(Dr Kibblewhite) We have actually been in discussion with the industry
certainly since May of last year, and I am talking here of formal meetings.
So we have met with the National Farmers' Union, the British Pig Association,
the CLA, the Poultry Meat Federation and others from May. We have had
meetings to discuss general binding rules, and I think it is worth mentioning
that in our minds general binding rules have been a possibly very good
solution for more than a year. We have been trying to progress them as a good
way forward for more than a year with the parties I have just mentioned and,
indeed, others. We have had specific meetings on those last autumn. Those
have gone on. We had one in January, and we have another meeting tomorrow
with the industry.
185. What is the nature of these meetings? Is it just a question
that the representatives come along and make a presentation to you telling you
about the doom and gloom and the worry of the industry, and you sit there and
soak it up, or has it been a proper dialogue n terms of evaluating concerns?
Have you developed any new approaches as a result of these consultations?
(Dr Kibblewhite) I think there has been a very proper dialogue. I
think we, however, have been struck, and certainly people returning from those
meetings have definitely been struck, by the forcefulness of the concerns
which have been brought to those meetings. I think all of us would want to
impress upon you that those do not go unnoted. However, they have been proper
discussions about what are the possibilities - for example, for different
types of general binding rules, are they practically feasible, how will they
work? As my colleagues said, we need to work with the industry in order to
understand what is feasible, what will work, because otherwise the regulation
will not work and it will not achieve the end which we all seek, which is a
better environment. I think they have been constructive, proper dialogue.
Certainly they have brought us in close dialogue with the real concerns of the
industry.
186. We have been advised as a Committee that some form of
implementation trials have been carried out so you have got some practical
feeling. Could you give us some details of how many of these trials have been
carried out, when did they begin, what is the nature of the trials, when will
they be evaluated?
(Dr Kibblewhite) We have two trials, one for a pig farm and one for a
poultry farm. The results of those are still being worked through. I would
like to say, though, that they are not the final statement in terms of trials.
We still have more work to do practically, not just with one or two farms but
with a large number of farms, so that we are able fully to understand, as I
say, what is feasible and what is not.
187. I think those who look at our proceedings will be very
interested to have some kind of timetable. You have given me a general
statement about what you are trying to do do now, but the fact is that you
want to roll out one in each sector to others. Could you give us a feel as
to the timetable which will be involved? How will these others be selected,
how will they be monitored? Give us a bit more detail.
(Dr Leinster) To put it in context, we have carried out these detailed
application trials, so this was how would a holding apply for an IPPC permit,
and they went through the process. That information is also feeding into
these discussions which are ongoing, and in fact we have some further
discussions tomorrow with these sectors to look at how we will take this
information forward. So these discussions are part of an ongoing process and
will continue as we work together with the industry to develop the site-
specific - and they are site-specific - and industry-specific procedures for
implementing IPPC on a pig or a poultry farm. So the discussions are ongoing,
and there are a number of people from the industry actively involved in those.
188. That is the kind of language, when one talks about something
being "ongoing", which could go on into perpetuity.
(Dr Leinster) No.
189. The question I asked was, can you give us some idea of a
timetable as to how it will roll over? People would like to know what is
going on.
(Dr Kibblewhite) We expect to have targeted trial-standard conditions
ready by the early summer. Those are internal targets. Those will not
necessarily form general binding rules, because for one thing it is the
Minister not ourselves who will have to take the decision in the final
analysis.
190. Let us be clear. In evidence to us, Sun Valley told us that
the charges which are going to be involved - because this is causing a great
deal of consternation in the farming industry - in preparing the permit
application (you discussed some of the evaluation) are based on a time
commitment, as I understand it, of between 10 and 15 working days for each
permit application, but then they go on to point out that when Agency staff
visited their company it actually took them one morning to go round two farms.
I am not entirely certain what it was they were doing going round those two
farms in one morning, but clearly Sun Valley's perception is that it is not
going to take 10 to 15 days to do this type of trial. Therefore, are you
gentlemen in a position to give us any kind of estimate of the amount of time
it will take to go through this process of inspection prior to the application
and granting of a permit?
(Dr Kibblewhite) I think that first of all we must distinguish between
the time which is spent on the farm and the time which is spent by the Agency
preparing to go on the farm to be efficient and effective while they are there
and then to come back. So I would not like the impression to be left that it
is only the time that our people spend on the farm.
191. So farmers are going to be required to do some kind of pre-
information exercise and send it to the Agency, are they?
(Dr Kibblewhite) I think that that is, on the whole, a helpful thing,
because it should help to reduce the amount of time that we need to spend and
will need to recover through charges under the current arrangements.
192. At this juncture, though, you have no feel for how long it is
going to take?
(Dr Kibblewhite) No.
193. That is not right?
(Dr Kibblewhite) No.
194. This is the whole basis on which the charging regime is going
to be levied, as I understand it - the amount of time it takes. Is that not
right?
(Dr Kibblewhite) No, I would like to correct that. I think that we
went through a consultation exercise in August. That has certain numbers of
data attached to it. Since August - which is some while ago - we have been
working very hard to understand how we can do this more effectively. Whilst
I am not going to be comfortable, I think, saying it is six days, or eight
days or nine days, I do feel that we are making good progress towards a more
efficient figure for everybody.
Mr Mitchell
195. We shall come to the charges and running costs later on. Are
you saying there, in relation to this 10 to 15 days which was talked about,
that a lot of that is preparation within the Department? It does not take
that long to put on a pair of wellingtons, does it?
(Dr Kibblewhite) No, it does not take long to put a pair of wellingtons
on, but it takes a good time to consider the scope of an operation and its
potential emissions.
196. So the actual visit to the farm is the tip of the iceberg,
you are saying, or the tip of the wellingtons?
(Dr Kibblewhite) Yes.
(Dr Leinster) To clarify this again, as Mr Jack was saying, farmers or
installations - it does not matter what type of activity is applying for an
IPPC permit - will have to fill in an application form which details a certain
amount of information. If general binding rules are not used, so if a
standardised approach is not used, then the applicant must give sufficient
detail so that we can understand from the detail both what the environmental
impacts are from that, plus how those impacts are currently being managed, and
any future improvement programmes which are in place on that farm or holding.
From that information, which can be quite comprehensive, we will then assess
the impacts and we will make up our minds as to whether the controls which the
operator has in place are adequate or not adequate to control. When we carry
out the inspection pre the issuing of the permit, what we are going to do is
to check against the permit application and make sure that the information
which is provided accords with the information provided in the impact
assessment so that the information provided on the permit application accords
with what is happening in practice. So we are checking that. Then we have
to go back again and determine what conditions we will apply - improvement
programmes, monitoring conditions, assessment conditions - within that permit.
If, however, we can move to general binding rules, then the great advantage
of that is that the application process will be much simplified. The operator
in that case will be able to say, "I operate this type of activity in this
location. Here is a broad description of it." Then there will be no
determination required of that. What will happen is that the standard
conditions will apply. For example, it could be that if a slurry tank is not
covered, it must be covered. However, if the slurry tank is already covered,
then it does not need to be. There will be those specific conditions which
will then apply to that. So that the whole process - that is one of the
reasons why we are so keen to go this way - is so we can simplify and
standardise this process.
197. Which saves you time and them money?
(Dr Leinster) It saves us time and money.
Mr Hurst
198. Am I right in saying that any new or substantially altered
installations require a permit as from the end of October?
(Dr Leinster) Yes.
199. Would it also be right to say that you have had no such
applications so far?
(Dr Leinster) At the present time the regulations are not in force. The
Department just now is preparing for consultation, so that is the fifth
consultation. We understand that some time after that - maybe around March
time - the regulations will be laid, and then in due course the regulations
will come into force. There will then be a period, once the regulations are
in force, of three months whereby any installation which would have fallen
within the scope of IPPC from the date that the IPPC Directive came into force
to that period will then have to apply for a permit under IPPC. So whenever
they come into force, there is a three-month period after that, and anybody
who has fallen within the scope of the IPPC Directive then will have to apply.
Mr Marsden
200. Can I ask a general question first of all? What are the IPPC
targets with regard to agriculture?
(Dr Kibblewhite) There are two types of production - pig and poultry -
and there is a general requirement to consider the possible environmental
impacts of those processes or those production units and to control those so
that they do not cause significant damage or risk of harm to the environment.
So there are no absolute numbers.
201. Therefore, from what you are saying, there are no targets?
(Dr Kibblewhite) No, no absolute numbers.
202. So what are the success factors for its implementation?
(Dr Leinster) The controls are based around the implementation of best
available techniques, so it is through those best available techniques which
will be, in England and Wales, informed by the European-wide BAT documents;
those will be the standards which have to be implemented through the use of
guidance documents in England and Wales. It is a process-led and process-
controlled system.
203. So the only success factors are complying with the standards?
(Dr Kibblewhite) No.
204. What are they, then?
(Dr Kibblewhite) For example, if we look at ammonia emissions, then we
do have data today on the level of ammonia emissions from units of these
types. We can estimate what ammonia reduction could result from the
introduction of best available techniques. We will also hopefully in the
future be able to continue to monitor these, so that we can see whether there
actually has been a reduction in ammonia releases, and then also through
environmental scientific research assess what benefits that has brought to the
environment. Those are the final success factors to improving the
environment.
205. So you are going to do that and you are going to publish it
and do it for each pollutant, is that right?
(Dr Kibblewhite) No, I think that we will be able to show that the
application of best available techniques will have reduced ammonia. There is
a great deal of scientific work going on on nitrogen deposition in the United
Kingdom and, indeed, regionally. The results of this IPPC initiative will be
factored into that and assessed within that framework.
206. Forgive me cutting through this red tape and this
bureaucracy, as I see it, but give me a yes or no answer. You are going to
have success factors. Are you going to publish them from your own Environment
Agency in order to demonstrate the success of the IPPC, yes or no?
(Dr Leinster) Yes.
207. Very well. Let me move on to interim arrangements. The IPPC
regulations will not apply to current installations until 2003 for poultry and
2004 for pigs. My question is, why are these sectors coming under this scheme
at different times?
(Dr Leinster) It is to do with phasing of workload.
208. So why poultry before pigs?
(Dr Kibblewhite) I do not think there is a science to this. There are
no types of processes coming forward from IPPC. Those are already covered,
of course, under some regulations, so arguably perhaps some of those would
come towards the end of the sequence, if what we are trying to do is take
account of environmental risk; but that is where it has been decided that we -
"we", the Agency - will operate in the timetable of it.
209. You say that "it has been decided". Who has decided it?
(Dr Leinster) The decision on the phasing in of sectors is for the DETR,
not for the Agency.
210. You are saying Ministers have decided this. It is not a
difficult question. Who has decided, that is all I am asking?
(Dr Leinster) The phasing in of sectors is decided by the DETR, so
eventually by the Minister for the Environment.
211. Right, thank you. The question has been partly answered
previously about the introduction of this scheme and the phasing, I appreciate
that, but how do you think you are coping with the introduction of this
directive?
(Dr Leinster) As I say, we realised that this was a considerable
workload. There were new requirements. So, for example, within IPPC we now
will have things like waste minimisation, restoration of sites, assessment of
incidents and accidents, energy conservation, raw material usage, they are all
new requirements within a regulatory framework. IPC does not cover those;
IPPC does. In addition, there are these new areas which will be coming under
regulation, so pig and poultry, food and drink will also be being regulated
under an integrated regime for the first time. We realised that and
established over two years ago now a project which will co-ordinate within the
Agency the work on this. They have been carrying out a considerable amount
of work. We have worked on application forms, the guidance documents, and how
it is going to impact within the Agency. I think we are well advanced in our
preparations.
Mr Jack
212. How much is it going to cost your Agency to go from this
interim to the actual up and running situation? How much have you put in your
budget for this expenditure, because you are not recovering anything from
anybody at the moment? How much is it costing?
(Mr Reader) We have some grant in aid from the DETR to help with the
setting up arrangement, so it is paying for the cost of the project.
213. I actually asked how much.
(Mr Reader) We have œ600,000 per annum from the DETR to help with the
process.
214. When did the clock start running on that œ600,000?
(Mr Reader) Last year.
215. Last year. And it covers what period then, right the way
through to 2007?
(Mr Reader) We have a small allocation from the DETR for next year but
essentially that œ600,000 comes to an end at the end of this financial year.
216. So after that, unless you recover some costs from somebody,
your budget is in deficit?
(Mr Reader) Yes, effectively.
217. How many extra people have you taken on to do all this
mountain of work?
(Dr Leinster) New people just now?
218. Yes, or are you all working much harder?
(Dr Leinster) We are all working much harder.
219. So there have been no extra people despite the fact you are
going to spend œ600,000?
(Dr Leinster) What we have done is the project is funded from that
œ600,000, so it is in fact over the last two years. It kicked in in April of
1998. That has funded the project. The project team is around ten people,
so those ten people are the additional resource that we have made available
for implementing IPPC.
Mr Mitchell: Let us go back to Paul Marsden.
Mr Marsden
220. If the owner of an installation had a certificate in ISO
14001, would that be the perfect basis by which to overcome these new
regulations?
(Dr Leinster) No. They are based on different requirements. ISO 14001
does not necessarily mean that you are in legal compliance. I have introduced
14001 type systems in different organisations and the Agency itself has 14001
in a number of installations.
221. Fine, thank you very much. You said they are going to need
a plan in order to demonstrate compliance.
(Dr Leinster) Yes.
222. So what is the basis of this plan other than what you are
saying is a tick list that you are going to provide?
(Dr Kibblewhite) I think the possibility is there that the plan that
we require could form part of an ISO 14001 accreditation but not necessarily
in reverse. So, hopefully, those who come into IPPC will find it easier to
get a variety of accreditation because they have a management plan already.
Mr Mitchell
223. We shall have to make faster progress but, having said that,
I just want to ask a supplementary. The regulations apply to current
installations for poultry to 2003. Is that not unfortunate in the sense that
the European regulations on the welfare of caged birds come in on 1 January
2003, which will require poultry producers to reduce the number of birds in
cages by a quarter? In other words, there is going to be a sudden drop in the
size of many installations and a big cost in re-equipment just as your charges
and regulations come in.
(Dr Kibblewhite) I do not think that ----
224. It is going to be messy, is it not?
(Dr Leinster) It will have to be managed.
225. It seems a curious time to bring it in when you could
postpone it for a year to take account of the changes.
(Dr Kibblewhite) I think we need to be clear that we cannot postpone
it for a year on our own authority, the Agency cannot postpone it for a year.
Mr Mitchell: Okay, thank you. Michael Jack.
Mr Jack
226. We have heard a lot about the general binding rules. Will
you have to have a different set for poultry and for pigs?
(Dr Leinster) Yes, because they are installation specific. They are
rules which apply to specific impacts and specific activities.
227. But in terms of the output of animal wastes and emissions of
gases, just help me to understand what is different between pigs and poultry?
(Dr Leinster) If we are talking about things like covering of slurry
tanks, that would be the same, so those would be very similar. The only place
that we need to be different is where we need to be different. If there is
commonality then we will use those common approaches. So the control of diet
would be the same but emissions from particular installations, because of the
structures, might be different.
228. Just try and help consolidate in my mind exactly where we are
in terms of progress on general binding rules. We have hopped about a bit.
Just focus me on where we are.
(Dr Leinster) We have had extensive discussions, we are continuing to
have those discussions. We would like to be in a position to have agreed
draft general binding rules by early summer that both we agree and that the
industry agrees.
229. Just so I understand it, if you had a system of these general
binding rules would that give a position where somebody could apply for an
IPPC permit, look at the general binding rules and say "okay, I have done
everything on the list" and then you would go in to make an assessment as to
whether they complied or not?
(Dr Leinster) Yes. What we will have to do, even under general binding
rules, is make sure that the people are operating because some of the general
binding rules will be procedural and we will need to make sure if they say
they have covered tanks that they do in fact have covered tanks, that if they
are managing inputs into diets that they do have procedures in place, they can
demonstrate that they are doing that. We would carry out those checks.
230. You say in your evidence that you have been asked by the
Government to develop proposals for determining when an installation in any
sector is to be regarded as having a low impact on the environment. Can you
give us a flavour, therefore, of how these arrangements will be streamlined
under the general binding rules in the light of low impact activity as opposed
to more normal?
(Dr Kibblewhite) Low impact installations are ones which within the
meaning of the directive have a negligible impact on the environment, shall
I describe it as, but our advice is that thresholds that have been set stand
above those which would be defined as ---- We cannot go below the thresholds
that we have currently got and have an installation that falls inside these
low impact installation rules. Basically that is a non-runner I am afraid.
Mr Marsden
231. Can I jut turn back to charges, the detailed charges. The
Government told us that "the Environment Agency is under a duty to recover the
costs it incurs in carrying out its regulatory functions. The Agency has
recently consulted on options for an interim charging scheme whilst it
develops a longer term scheme that should be in place from April 2001." Under
the published proposals "an initial application charge of up to œ18,000 and
an annual subsistence charge of around œ7,000" would be levied. However, when
we compare that to the Scottish Environmental Protection Agency, they proposed
charges of "a minimum of œ7,894 for registration plus annual charges of at
least œ2,764". The question is why are they proposing to charge less than
half of those of the Environment Agency?
(Mr Reader) We are going to compare notes with the Scottish
Environmental Protection Agency and do a comparability study to make sure that
we have got it right as best we can. You should know that the Scottish
Environmental Protection Agency has a much higher level of grant support than
the Environment Agency.
232. Is that a plea for more money?
(Dr Leinster) Yes.
(Mr Reader) It could be an oblique plea for more money, but I think
it is influential in the way in which SEPA is putting costs into the charging
scheme compared to what the Agency is putting into the charging scheme.
Before we do the detailed study I would only put it on the table as an issue
that needs to be looked at.
233. So what do the charges cover, the œ18,000 application charge
and the œ7,000 handling charge? Sell it to me.
(Mr Reader) It is an interim charging scheme. As I say, it covers the
period to 31 March 2001. We have consulted on the basis of fairly simple
proposals which are time and materials or based on existing charging schemes.
The time imperative that was around us at the time when we went out to
consultation was on the basis that the regulations were likely to be coming
into operation from the autumn of last year. That forced the pace as far as
the consultation process was concerned. Since the regulations are not in
force there has been a delay and we have had the benefit of the consultation
process and that has helped inform our current thinking. We feel that the
proposal is reasonable for those sectors already under IPC charge.
234. Forgive me, time is very short here. I come back to it:
what do the charges cover?
(Mr Reader) They cover the cost of the inspector in the work that he
does in relation to both inspecting the site and the work off site, preparing
for and following up the licence determination, the technical support in
relation to that, technical guidance, the development of new regulatory
regimes, policy development and research and development costs as well as the
on-costs associated with that.
235. So is it possible to give us a breakdown of the œ18,000
figure and the œ7,000 handling charge?
(Mr Reader) It is. I could do that now or I could submit additional
evidence.
236. At a later date will be fine. It will be intriguing to know
how you manage to get it up to œ18,000. There is no profit element, is there,
it is just charges?
(Mr Reader) No profit, just charges.
Mr Mitchell
237. If you could give us a paper on that, it would be very
helpful.
(Dr Leinster) Can I just clarify though that this is one of the reasons
and one of the drivers. Having had the responses to consultation we then went
back and looked at our costs and it was one of the drivers for this
development of general binding rules. General binding rules are not the great
panacea of all ills but we do believe that we if we can use and introduce
general binding rules then we should be able to have a reduction in these
level of charges.
Mr Marsden
238. That was my next question. What progress has been made
towards establishing a long-term charging arrangement? How much lower do you
think the charges will be where GBRs are applied?
(Mr Reader) In relation to the long-term charging arrangement we have
just had a general consultation on the principles of a charging scheme, the
focus has been in terms of getting an interim charging scheme ready.
239. So you do not know?
(Mr Reader) Undoubtedly if we are able to apply GBR it will reduce the
current numbers that are on the table.
240. How much do you subsidise that figure of œ18,000? If you are
saying that SEPA subsidise their figures, do you have any subsidies at all?
(Mr Reader) There is no subsidy. We are required by our financial
memorandum to fully recover all relevant costs associated with regulation and
not to discriminate between one class of charge payer and another.
241. Why are you only going back to SEPA now? Why did you not sit
down with them at the beginning and actually figure out how you could come up
with a common charging scheme together and, therefore, perhaps SEPA could
knock some off the bottom line, so to speak, if they have got extra dosh?
(Mr Reader) I think that is a valid criticism, that we should have
negotiated earlier with SEPA over this matter.
242. How does your charging structure conform to the "polluter
pays" principle?
(Mr Reader) It conforms to the principle in relation to the recovery
of the regulator's costs. The charge payer is required to pay the cost of the
regulation associated with the licence.
243. Okay.
(Mr Reader) So our accounts allocate and record the costs associated
with licence regulation and the costs are recovered through the charging
scheme and the accounts, of course, are subject to external audit.
244. If I can throw one last comment at you and see how you catch
this. For the ordinary farmer sitting there you are coming across as being
very vague and woolly: "well, we are not quite sure what is going to be
required, it depends on the individual circumstances, it is going to be a lot
more red tape, believe it, guys, it will cost you an absolute fortunate. We
do not know really why we did not sit down with other similar bodies and see
if we could come up with common figures". You are coming across here as being
extremely amateurish and you still do not know what is going to happen in the
future, you cannot actually look forward more than just a few months' ahead.
What is your reaction to that?
(Dr Leinster) I think that is unjust. I think it is a caricature. I
think that we have worked hard with the industry to develop a way forward.
I think we have got that way forward. We are working very hard ----
245. So the industry is happy with it then?
(Dr Leinster) The industry is not necessarily happy with it but they are
working alongside us. I think that is positive. I think we will come up with
a position where we will get an agreed position between ourselves and industry
as to how we take this forward. Will any sector be happy where they have to
pay charges where they did not have to pay charges before? No, they will not.
Are we happy when we have to pay taxes and charges when we did not have to pay
charges and taxes before? No, we are not. I think that is a fact of life.
What we need to do is to come up with the most appropriate way forward. I
believe that we are working hard to develop that. This is a complicated
business and we are working hard, we are devoting resources to this, and I
believe that come early summer we will come up with a solution to how we are
going to regulate pig and poultry intensive farms under IPPC. Have we made
mistakes along the way? Yes, we have. Can we learn how to do things better?
Yes, we can. Do I think we will come up with a good solution? Yes, I do.
Mr Mitchell: I will remind everybody that we are running into the time
for the next session. David Curry.
Mr Curry
246. How can you work out the charges when you do not know how
many installations there are going to be?
(Dr Leinster) The charges are raised on a per installation basis.
247. You do not know how many installations there are going to be,
you said so.
(Dr Leinster) Sorry. We carry out the work for a particular
installation and it is the work that we carry out for that installation which
predominantly determines the charges that we levy.
248. So the level of charging will not be likely to shift. If you
were doing, let us say for the sake of argument, 40,000, would the level of
charges be different from doing 60,000 or 20,000 on an individual basis?
(Dr Leinster) The way that you get economies of scale within this is by
this development of general binding rules because that is the way you have
this standardised approach. What we are moving from is the site specific
nature, which a number of other sectors will be authorised under, to a very
standardised approach and through that standardised approach is where we get
economies of scale.
Mr Jack
249. What is the hourly rate that you are putting in in terms of
your costs? I appreciate that you multiply that by the number of
installations, but what is the hourly rate?
(Mr Reader) We have a daily charge rate which embraces all of the
costs associated with the site.
250. What is that?
(Mr Reader) It is œ1,215 daily rate but that embraces all of the costs
associated, not just the inspector at the sharp end but also the technical
guidance and ----
Mr Curry
251. You can hire Linklaters for less than that, can you not?
(Mr Reader) It is not a daily rate, it is a method of recovering costs
back to the site.
252. I have always been deeply suspicious of full economy cost
recovery because I want to know what goes into the full economy. When you did
your little catalogue you said research but that is discretionary, is it not,
what research you do? Are farmers going to be consulted on what research you
carry out?
(Dr Kibblewhite) I think the answer to that is yes.
253. In what way are they going to be?
(Dr Kibblewhite) We have a research and development programme which is
partnered by many other organisations and it is not unknown for us, in fact
it is quite common for us, to put money in alongside trade organisations or
producers so that we can both come to better solutions to problems that we
both face.
254. You are then stating that you will define the research that
needs to be done. If I am a pig farmer and I am absolutely on my uppers and
I am fed up with paying extra for stall and tether and everything else, and
you come along and you are going to sling these charges at me and say there
is something in there for research, my inclination is going to be "bugger
research", I want to minimise these charges. What choice am I going to have
to take those decisions to minimise my charges?
(Dr Kibblewhite) The Agency has a duty to found its activities on good
science and that requires that we do research and development. I do want to
say that we do not do research and development in isolation from the industry
that it affects.
255. So we are going to end up with the best research on the
smallest industry in Europe, are we not?
(Dr Kibblewhite) I hope we will end up with the best research and I
hope very much we will not end up with a small industry.
256. Is it true that each Member State has discretion as to what
level of charges they place?
(Dr Leinster) Yes, it has.
257. You said that you had close contact with your continental
equivalents. Have you formed a view on the level of charges they are likely
to impose?
(Dr Kibblewhite) We note that under IPC in the Republic of Ireland
there is already a charge for pig and poultry and this is measured in
thousands of pounds, so whilst that is not an exact parallel ----
258. With respect, thousands of pounds can be anything more than
œ2,000.
(Dr Kibblewhite) It is more than œ2,000
259. What is it?
(Dr Kibblewhite) From memory, and I would like the opportunity to
double-check this, about œ6,000 or œ7,000.
260. It is well below your proposed level.
(Dr Kibblewhite) However, that is for IPC, not for IPPC.
Mr Curry: Knowing what you know about the way your opposite numbers
operate on the continent, would you imagine that your Dutch, Danish, German
and French institutes are likely to end up levelling less than we do, more
than we do or about the same as we do?
Mr Marsden
261. You can phone a friend if you want.
(Dr Kibblewhite) I do not need to phone a friend.
Mr Curry
262. As a candidate country, if you would like to sling Poland in
at the end.
(Dr Kibblewhite) One of the items of research and development that we
have commissioned is a comparison of the pig and poultry industries in
different European countries and how IPPC is likely to be implemented and
amongst the facts that we have been able to obtain from that is knowledge
that, indeed, in some countries the regulatory costs will not be charged back
to the farmers.
263. Which are these do you imagine? I realise that you are
operating under rules imposed upon you, I am not attacking you for that, I am
just anxious to know what the situation is.
(Dr Kibblewhite) We will be very glad to give you a summary of that.
Mr Mitchell
264. Are your European counterparts bound by the same cost
recovery?
(Dr Kibblewhite) No.
Mr Curry: It is entirely discretionary.
Mr Mitchell: Thank you very much, gentlemen. We have overrun but the
answers have been very informative and robust. We are very grateful to you. MEMORANDUM SUBMITTED BY THE MINISTRY OF AGRICULTURE, FISHERIES AND FOOD,
THE DEPARTMENT OF THE ENVIRONMENT, TRANSPORT AND THE REGIONS AND HM TREASURY
EXAMINATION OF WITNESSES
RT HON MICHAEL MEACHER, a Member of the House, (Minister for the
Environment), Department of the Environment, Transport and the
Regions, and MR STEPHEN TIMMS, a Member of the House, (Financial
Secretary to HM Treasury), HM Treasury, examined.
Mr Mitchell
265. Mr Meacher, Mr Timms, welcome. I apologise that we have been
overrunning. So great was our fascination with the scale of charges which are
going to be unleashed on this unsuspecting industry that we overran somewhat.
I apologise for that. We are grateful to you for coming before us. It is
becoming almost a standard routine, our sessions with you. We are sorry that
we did not meet you on the GMOs earlier on because it has become very much a
habit. Can I start with a question and say that the Minister for Agriculture
is currently reviewing red tape within the agriculture industry, so why in
that context are you seeking to increase the regulatory burden on an industry
which is clearly in crisis?
(Mr Meacher) Well, the IPPC directive, of course, has to be transposed
under the European rules. It had to be in place - transposed - by October 1999
and it was, in the case of the UK. We are, indeed, concerned about its impact
and we are, of course, extremely well aware of the very serious crisis in
agriculture at this time. If I can make just two or three points about its
impact. First of all, IPPC charges are not actually yet settled, I am sure
that came out of your preceding session. The Environment Act 1995 requires the
Environment Agency to recover its regulatory costs and it consulted on
proposals with regard to interim charge measures last year, once it was
devising longer term charging schemes on the basis of its experience of
operating IPPC from April 2001. Now, I am aware that those charges are high,
between œ12-18,000, I think, for the initial application, œ7,000 a year in
annual charges, those are high. What I can say is that we have asked the
Environment Agency to look again at its proposals and we will not approve any
charging scheme unless we are content that it fairly reflects the regulatory
effort involved. My second point is that very few if any farms are likely to
be subject to the interim charges because the existing pig and poultry
installations will not be phased into IPPC until 2003/04 so it is only new or
substantially changed installations which will have to pay the interim
charges. Thirdly, the Environment Agency is discussing also, as I am sure they
told you, the development of generally binding rules, that is rules or
requirements set by the Secretary of State as opposed to permit conditions.
Those are being discussed now with the pig and poultry sectors and that should
reduce the charges levied by reducing the regulatory effort of the Environment
Agency. I do not deny for one moment the seriousness of the crisis in
agriculture. These are significant charges. We are required to implement them
by the directive but we are seeking to do it in a way which ameliorates that
exact cost regime as far as we can.
266. We are considering both the Climate Change Levy and the IPPC
in this Committee and both do - will - impose substantial charges on an
industry which is already in financial crisis.
(Mr Meacher) I am accepting that, I am accepting that the industry is
in a very deep, serious and painful crisis. I was at an NFU meeting with Ben
Gill on Friday and he assured me that it was the worst for 40 if not 60 years,
which is the whole of my lifetime. We have no doubt about that. The question
is since we are obliged by the European Directive to implement the IPPC, we
cannot avoid that, what we have to do is to do it in a way which eases the
charges so far as we can.
Mr Curry
267. With respect, you are obliged to implement but the directive
lays down no principles of charging, does it?
(Mr Meacher) That is true. The Environment Act 1995 requires the
regulatory costs to be recovered.
268. I want to clarify that, that the European Directive as such
does not?
(Mr Meacher) Correct.
269. Therefore, there need be no comparable level of charges
across the European Union?
(Mr Meacher) Correct.
270. The level we charge is the level which flows from our own
legislation?
(Mr Meacher) Correct.
Mr Todd
271. Just to clarify that legislation even further, presumably the
phasing in, you referred to 2003/04 implementation for the pig and poultry
sector, that phasing in is also not obliged by the European legislation, that
precise timetable, but is determined by ourselves and presumably regardless
of how our competitors are implementing IPPC in those particular sectors?
(Mr Meacher) That is true again. The requirement for full
implementation is by 2007 and I dare say nobody wants to be phased in before
2007.
272. Just to clarify that, there is a significant risk, therefore,
on your timetable that we will apply IPPC to those sectors substantially ahead
of our European partners?
(Mr Meacher) I have not got before me the dates at which other Member
States propose to phase in their pig and poultry sectors.
273. Should you not have?
(Mr Meacher) I think we have to make up our mind on the basis of the
evidence before us. What I am saying is that we cannot, even if we choose to,
implement in regard to all sectors in the year 2007. Some large sectors, for
example steel is being phased in in 2001. We have to do it in a way which is
manageable by the regulatory authorities.
Mr Mitchell: We are getting out of sequence here.
Mr Hurst
274. Whilst it is accepted and in fact is the obligation to bring
in the regulations, as David Curry says there is not the obligation to charge.
(Mr Meacher) Yes.
275. Charges are only a tip of the iceberg, the cost to the farmer
involves drawing the plans, the installation of the new equipment and possibly
the monitoring of that so the overall cost to the farmer is, of course, beyond
the charge made by the Environment Agency. The phrase we hear all the time
from the farmers is there is not a level playing field. Here seems a clear
example of where we are allowing for the non level playing field to operate
since we have just been told by the Environment Agency that some EU countries
will not be charging and we have heard, also, that Scotland appears to be
subsidising the charging regime where we are not.
(Mr Meacher) First of all, the Environment Agency is gathering
information about charging in other Member States, that is partly in answer
to a previous question. So we are conscious of the need to secure a level
playing field so far as we can. In regard to the particular point you make
about the Scottish Environmental Protection Agency, I understand that the
Environment Agency does make an annual charge for deemed authorisations though
the Scottish Agency does not. I think the main reason for that is that the
Environment Agency can charge subsistent charges at the outset, which the
Scottish Agency cannot, but the Scottish Agency has a higher application fee.
In other words, what I am saying is the exact charging regime between the two
is not identical, in each case it is a matter for them to decide and they
cannot be directly compared.
Mr Mitchell: Let us come to the Climate Change Levy, you have a
supplementary, David?
Mr Curry
276. Yes, I just want to explore those five little words "so far
as we can". In terms of philosophy now, does the Government believe that
creating circumstances in which a British industry competes on level terms
with its competitors in a free and relatively unsupported market, which is the
case of the intensive livestock, should be a legitimate concern of Government?
(Mr Meacher) Yes.
277. If you find that because of the clash then of, let us say,
two principles, full economic cost of recovery which is applied in the UK
through domestic legislation and the principle of the level playing field,
which has just been referred to, that those are in conflict, how do you
resolve it?
(Mr Meacher) Well, I did say that we are trying to resolve it, partly
through the application of generally binding rules in order to avoid the full
impact of permit conditions. They are in effect negotiated agreements with the
Secretary of State, and that I think is certainly one way by which we can
reduce the impact. The other is, as I said, we are talking only, certainly
with regard to the interim charges, with regard to new or substantially
changed installations and there will be few, if any, of those. So we are
talking about several years ahead in 2003/04. What will be the state of the
farming industry then it is very difficult to say.
278. In the principle of the concordat and all of that, you can,
of course, if you wish, discuss what happens in other parts of the United
Kingdom. For example, there are no dairy inspection charges in Scotland, they
are levied in England. We have already heard that the level of charging in
Scotland is likely to be significantly less than the level of charging here.
Do you regard that as a necessary consequence of devolution or something that
ought to be addressed?
(Mr Meacher) It is certainly not a necessary consequence of devolution,
what it means under devolution is that either the UK or Scotland or one of the
other devolved institutions can indeed determine their own arrangements and
their own charging systems. As I said, in answer to a question to Mr Hurst,
they are not directly comparable, some charges are higher in Scotland, some
charges are higher in the UK.
Mr Mitchell: Let us leave that there and let us move on so that Mr
Timms has something to say.
Mr Jack
279. As this Climate Change Levy is an invention of the Treasury
in an ever greater quest for finding new things to tax, can you tell us, Mr
Timms, whether in fact we are going to meet our 12« per cent reduction in
emissions in greenhouse gases that we are committed to as far as Kyoto is
concerned as a binding imposition of this CCL, and are your own Government's
requirements in terms of reduction in COý emissions, the 20 per cent, also
going to be met? Have you established that?
(Mr Timms) Let me respond, first of all, to your comment about the
Treasury's enthusiasm for finding new things to tax. I think I ought to point
out to the Committee, it is probably already well known, that this is of
course going to be a revenue neutral package, there will be no net gain to the
public finances as a result of the introduction of the Climate Change Levy
because all of it will be recycled back to business through the reduction in
employer's national insurance contributions and the package of support for
energy saving measures. It is neutral as far as the private sector and neutral
so far as the public sector is concerned. I do expect the Levy to make a very
significant contribution towards our achieving the targets that we have signed
up to at Kyoto and that I think all of us want to see achieved. We estimate
now that the Levy itself will lead to savings of the order of two million
tonnes in carbon emissions a year and that the negotiated agreements that
Michael's Department has been responsible for putting together will probably
lead to at least as much again, so four million tonnes altogether on a
conservative basis. So a very significant contribution towards achieving the
targets that we have set.
280. Can I just ask you a question. I put down a Parliamentary
Question to the DTI to find out a little bit more about the effect of this
Climate Change Levy and the sum total of the information that Helen Liddell
supplied to me effectively said that if you decreased the generation of
electricity by coal by 30 per cent and increased the generation of electricity
by gas by 40 per cent you would have saved the entire two million tonnes of
COý at a stroke. Why did you not pursue a road like that instead of this
complex matter which we will see in a moment has a big impact on a sector like
horticulture?
(Mr Timms) I think it is important to bear in mind that other countries
in Europe and elsewhere around the world are introducing very similar measures
to our's, the strategy we have adopted is not an unusual strategy in any
sense. I think so far there are eight EU countries that have introduced an
energy tax or a measure of that kind and I think we will find that pretty well
all of the OECD countries will need to move along these lines as well in order
to meet the targets.
281. Before Mr Timms escapes into your clutches, Mr Meacher, to
give your views, I asked a question about the methodology, not the principle,
of implementing some kind of changed arrangements to save COý emissions and
you simply gave me the impression that we were following what other people
were doing. My specific question was all of this could have been achieved
effectively by not having a moratorium on new gas fired power stations and
simply reducing the amount of electricity generated by coal. My question was
- I will put it to you again - why have you chosen to go down a more complex
route than one which is simple and straight forward like that?
(Mr Timms) Your question implies there is some sort of abberation about
what we are doing, I am simply making the point that we are not, we are going
down the road that other OECD nations and EU nations are going down. I do not
think it is a peculiar road at all. Of course there are other things we will
have to do as well to meet the Kyoto targets but the Climate Change Levy as
proposed will make a very significant contribution towards achieving those
targets.
Mr Mitchell: Could you come off your own more complex road and back on
to the straight and narrow.
Mr Jack
282. I do not think it is complex at all, it is just to enable
people to understand. As far as horticulture is concerned, horticulturalists
have a different view. They feel that at the level of the enterprise they are
being disproportionately affected by this particular measure and they put it
to us that if you make their industry uncompetitive and we have to replace
home grown horticulture products by imported, you will then have an energy
expenditure - if we can put it that way - bringing those materials to the
United Kingdom. What evaluation have you done about this global effect of
displacement of production from here because of uncompetitiveness and the
energy which would then have to be expended with COý emissions in replacing
that lost produce?
(Mr Timms) There have been two key objectives we have had in mind in
designing the Climate Change Levy. Number one, maximum environmental
effectiveness and, secondly, protecting the competitiveness of UK firms and
that has been a very, very important consideration throughout this process.
That is why a number of changes were announced by the Chancellor in November
and several of them have directly contributed - will directly contribute - to
minimising the competitiveness impacts on UK horticulture. For example, the
reduction in the size of the Levy from one and a quarter billion to a billion
pounds, that immediately will reduce everybody's Climate Change Levy bill,
including the bill of those in horticulture. The Chancellor announced also
that there will be an exemption from the Levy for power produced from good
quality combined heat and power sources and combined heat and power is used
by a significant ---
283. Apart from your ameliorating activity, you have done no
detailed evaluation about the impact on horticulture in the way that I have
described?
(Mr Timms) Let me just conclude the point if I may.
284. Is that a yes or no answer?
(Mr Timms) Let me conclude the point that I am making because it is an
important point I think for those who are concerned about horticulture. The
combined heat and power systems are widely used in the horticulture industry.
They are increasingly used, their growth is rising. We have announced powers
generated from those sources will be exempted from the Levy, so that is a help
to the horticulture sector as well. Now, I met before Christmas with the
National Farmer's Union, with the ubiquitous Ben Gill, who has already
featured in our answers this afternoon, and he raised with me then the
prospects for horticulture. I am expecting to see him again later this week
and I imagine he will want to take those discussions forward on that occasion.
We are looking carefully at the impact of the Levy on horticulture as on every
other sector.
Mr Mitchell
285. Mr Meacher, do you have any comments?
(Mr Meacher) We are some way away now from when Mr Jack first asked the
question but I think it does need to be said that simply increasing the
generation of electricity by removing the temporary constraint on gas consents
and virtually eliminating electricity generation from coal does have very
widespread impacts on local communities, in the first place. Secondly, it has
impacts also on energy supply in terms of the diversity and security of supply
and not becoming over dependent on one source. I would say, also, that the
great advantage of the Climate Change Levy is that it does promote energy
efficiency. There is massive wastage of energy in virtually every sector of
manufacturing, commercial and service sector, domestic sector and agriculture.
What we are asking for from CCL are cost-effective measures, measures which
actually are in the interests of those industries to improve their
performance. So for those reasons, irrespective of what one might decide
about gas and coal, it is very important that climate change does improve
energy efficiency on a major and continuing scale and that is what it does.
286. The horticultural industry regards itself as carbon neutral.
Why is it that they have to apply the Climate Change Levy?
(Mr Timms) The point that was made in Lord Marshall's initial report is
that all sectors can contribute to easing the problems of climate change by
reducing their energy use and a reduction in the amount of energy used, for
example, in the horticultural sector is just as valuable as a reduction in
energy generated elsewhere.
287. Can you think of any other sector that is carbon neutral in
the context of this levy?
(Mr Timms) My point is that this sector can make just as much of a
contribution to easing the problems of climate change as any other.
288. Do you know of another sector that is carbon neutral? Is
that a yes or no answer?
(Mr Timms) I am not qualified to answer. I do not think that is
germane to the question of whether this sector should be contributing to
easing the problems of climate change by addressing its energy use.
289. Horticulturalists would argue very straightforwardly that
growing plants takes in carbon dioxide. They gave us evidence to show that,
for example, CO2 enrichment of tomato crops actually enhanced the crop and the
efficiency of operation.
(Mr Timms) That does not mean there is not a contribution that they can
make as well to reducing energy usage and reducing emissions because they can.
290. Do you agree with paragraph 36 on page 8 of your submission
where you say it is not possible to say with precision what the effect of the
Climate Change Levy will effectively be on the various sectors in agriculture?
(Mr Timms) At this stage we cannot say precisely what the effect will
be and that paragraph does set out the range of variables which will influence
that effect.
(Mr Meacher) We are just about to publish the climate change programme
in the next month or two and that will give the quantified targets for every
sector, manufacturing, industrial, agricultural, domestic, governmental and
I think it is very important that those quantified targets should be clearly
understood. There are improvements to be made by every sector.
Mr Borrow
291. I want to follow on from that and ask the Treasury Minister
what sort of response I should give to tomato growers in my constituency who
believe that the purpose of the Climate Change Levy is to reduce CO2 emissions
when, as we have heard, many of them do not produce any CO2 emissions in the
first place and the tax is supposed to be to reduce CO2 emissions and not to
reduce energy use.
(Mr Timms) Anybody who consumes energy is creating emissions which we
want to see reduced and, of course, the problem of climate change is one that
everybody in agriculture is particularly acutely aware of because their future
as an industry is likely to be more affected than almost any other by the
problem of climate change. It is the biggest environmental problem that we
face. If the horticulture sector is able to reduce its energy usage then
emissions will be reduced and there will be a significant contribution towards
tackling the problems of climate change. As Michael says, there are
contributions that every sector can make and we want to encourage everybody
to play their part.
292. I do not think you answered the question. I will move on to
what I should have been asking a question on in the first place.
(Mr Timms) I hope it has. I entirely take the point about carbon
absorption elsewhere, but that does not mean that there is not a contribution
to be made as well by energy reduction.
(Mr Meacher) I think we do understand there is a problem over
horticulture. We had to look at the opportunity for industrial sectors to be
able to take advantage of negotiated agreements. We have used the IPPC
criterion. The trouble with any criterion you use means that there are
probably one or two deserving cases that fall outside. We were quite prepared
to look at other criteria. I ask the Committee to believe that we found that
there were even more arbitrary and anomalous results from using these other
criteria. The Chancellor has said that we are still prepared to look at other
criteria provided they have clarity, provided they do not breach the
requirements of EU state aids and there were a couple of other criteria I
cannot immediately remember. Horticulture is in this category of difficult
cases and if they could meet those criteria we could indeed have another look
at it.
(Mr Timms) That was the point that I put to Ben Gill when I met him
before Christmas and which he may well be coming back to me about this week.
293. On the broader question of the effect of the Climate Change
Levy on agriculture, to what extent was your assessment of the competitiveness
of the industry based on the industry as a whole or did you divide the
industry into sectors to look at the effect on individual sectors?
Horticulture is obviously one of those sectors?
(Mr Timms) The changes that were made to the design of the levy in the
Pre-Budget Report in November we think will mean that the levy will be broadly
neutral between the manufacturing and service sectors. There was a lot of
concern initially that there would be a net transfer from manufacturing to
services. That will not be a feature of the levy as now proposed. We have
not published more detailed information about what would happen at a level
beyond that rather broad division into manufacturing and services, but we are
not saying that the levy is going to be neutral for every sector or, still
less, every firm or site, I do not think that would not be possible.
294. The industry has been interested to compare the effects of
the levy in the UK compared to other EU countries in particular and has looked
at the regimes that have been implemented in other countries. One of the
examples that was given to the Committee was the example of the Netherlands
where the levy is not being imposed on horticulture if they can show that
between 1980 and 2000 they have been able to achieve certain energy saving
targets during that period. I wonder whether you would consider that as being
a suitable alternative regime to the one that is currently being proposed for
horticulture in the UK?
(Mr Timms) No, we have not looked favourably on the idea of exempting
whole sectors from the levy altogether. That really goes back to Lord
Marshall's original report where he made the point that there was merit in
increasing the incentive for every firm to reduce its energy usage in order
to contribute to meeting our targets. We have accepted his recommendation and
we have not looked at exempting whole sectors.
Mr Mitchell
295. It is not an exemption, it is a phased reduction depending on
the reduction in emissions since 1980.
(Mr Meacher) We are very well aware that some sectors have been more
advanced in terms of improvements in energy efficiency than others and we are
certainly concerned that they should not be disadvantaged by the application
of the Climate Change Levy, and when looking at the capacity for further
cost-effective improvements as defined by the Environment Technology Support
Unit and the detailed work that they have done on energy efficiency in each
sector we will not be disadvantaging those who have already made progress, the
object is to reach all cost-effective measures. If most of that has been done
in the past then relatively little requires to be done now. If very little
has been done in the past considerable change is now required. So there will
be no disadvantage on those who have been good boys in the past.
296. But there will not be the kind of compensation the Dutch are
proposing for horticulture.
(Mr Timms) Michael made the point earlier that the Chancellor has said
we will be prepared to look at alternative proposals for energy intensive
sectors facing international competition and that is the point that I put to
the NFU before Christmas. I am meeting them later in the week. Let me just
run through what the four criteria are that we put to him and to everyone else
who is looking at these issues in other sectors as well: an alternative
definition would need a clear rationale; it would need to provide legal
certainty, that is one of the big benefits of the IPPC basis; it would need
to be simple administratively and need to be consistent with EU state aid
rules. Given those criteria, we are prepared to look at alternative
propositions to the IPPC basis and I am looking forward to my meeting with the
NFU later this week.
Mr Borrow
297. Has your Department got detailed information on the way in
which our EU partners are proposing to implement the Climate Change Levy on
agriculture in general and horticulture in particular?
(Mr Timms) We certainly gathered a good deal of information about the
approaches being taken to climate change energy and taxation across Europe.
I am not sure to what extent we have gathered detailed information about the
horticultural sector particularly in each area, but one or two of the examples
that you have mentioned this afternoon certainly have been drawn to our
attention. I would say that my impression generally from the discussions that
I am aware of across Europe is that the approach that we have taken to this
issue is finding quite wide favour amongst those who have not yet implemented
a tax but are considering doing so. It is a good deal less complex than some
of the other approaches that have been taken.
298. Would you recognise that it is important as far as the
competitiveness of the horticultural industry is concerned that any regime
that is introduced here should not place the industry here at a disadvantage
compared with the regime that is being introduced by our partners in the rest
of the EU?
(Mr Timms) Maintaining the competitiveness of UK firms has been one of
the two main concerns throughout this whole process and we are certainly
continuing to look at issues like this one that are still being raised with
us.
Mr Todd
299. I do not know how often you venture into a supermarket and
buy tomatoes and things like that.
(Mr Timms) Weekly.
300. You may notice where they are grown. One place would be the
Netherlands, another would be Spain, another would be France. They all have
one thing in common, which is that currently they do not exercise any levy on
their horticultural sector for a variety of reasons. Spain and France just
do not do it anyway, but the Netherlands have an exemption for the reasons
already set out. Do you think that is likely to have a bearing on the
competitiveness of the UK horticultural sector?
(Mr Timms) The French Government is preparing an energy tax and their
officials were in the Treasury quite recently swopping views on that subject.
I have made the point already that preserving the competitiveness of UK firms
in every sector has been a very important consideration throughout this
process and it continues to be so and we will continue to look at difficulties
that are drawn to our attention.
301. The other aspect of competitiveness is the issue of how such
a levy could be collected and administered. In the case of horticulture you
are dealing with a large number of small to medium sized companies with no
collective body to represent them other than the NFU. What you appear to be
seeking is an administrative framework driven by the NFU as the police of that
which will be extremely hard to manage. We have already had evidence as to
the likely complexity and cost of that which they will have to pass on to the
sector.
(Mr Timms) I do not think that is a concern about the Climate Change
Levy ---
302. Yes it is.
(Mr Timms) No, because the levy will simply be added onto the
electricity bills.
303. But to get their 80 per cent rebate, which they are certainly
at least going to seek to get, they are going to need to have a process of
achieving compliance with an agreement, will they not, and they have already
set up arrangements whereby I think they told us it was going to be œ200/œ300
charged back to each member company involved to cover the cost?
(Mr Timms) Maybe this is what I am going to hear about at the meeting
later this week. I have not seen any proposals along those lines at this
stage. The sector might take the view that entering into a negotiated
agreement is too complex a process and they would not wish to do so.
304. But the penalty for doing that would be that they will not
get the 80 per cent, they will get a higher level levy.
(Mr Timms) That is right. I think I need to make it clear to the
Committee that the position at the moment is that negotiated agreements have
been drawn up on the basis of IPPC and there is a very good reason for that.
There is a significant requirement placed on all those sites and sectors
covered by IPPC that does not apply to others and therefore there is a very
good reason for treating those sites differently from the point of view of the
Climate Change Levy, but we are prepared to consider - and I go no further
than that - proposals for an alternative and a wider basis ---
305. You are aware that horticulture is not covered by that?
(Mr Timms) No, it is not and it is not party to a negotiated agreement.
306. So therefore they have got a problem. Sorry, the industry
has not got a problem; you have.
(Mr Timms) As I have said, we are prepared to look at alternatives. I
have not seen any alternative proposals as yet. I think it is a little bit
premature to start talking about the difficulties of administering an
agreement. At the moment we are nowhere near embarking on a process of
negotiation.
Mr Curry
307. I want to pursue with Mr Timms his point about maintaining
the competitiveness of British companies. If under the IPPC, after all Mr
Meacher's attempts to minimise the cost and after all the attempts to come to
a global framework for the agreement, it still became clear when this was
levied that it was going to be a couple of pounds per pig on the British
producer which was not going to be levied on a Dutch or a Danish or a German
producer, would you think it necessary to take steps to remove that
disadvantage?
(Mr Timms) I would not necessarily do so. It would be necessary in
order to form that judgment to consider the wider position on business
taxation and, of course, producers in the UK enjoy the lowest rates of
business taxation as a whole in the EU and have an advantage as a result of
that.
308. With respect, we could all give that answer.
(Mr Timms) It is the correct answer.
309. If you take the pig industry at the moment, you will know the
situation it is in. You will know there is a series of charges which it faces
which are not faced elsewhere. You will know that it is disappearing. I do
not want to exaggerate, but people are going out of business significantly.
On the principle of the last straw on the camel's back, would you contemplate,
on the grounds that in the generality of things they were actually well off
even though they had not noticed it at the time, an additional charge which
represented in that element a competitive disadvantage with their competitors?
(Mr Timms) First of all, the pig sector is different from the
horticulture sector because it is covered by IPPC and therefore is eligible
to enter into a negotiated agreement. Assuming that process is successful,
there will be an 80 per cent reduction in the rate of levy charged on pig
farms, including very small pig farms which are not covered by IPPC, which
made it clear that if sites would qualify other than for their size just below
the size threshold on IPPC they will still be eligible for inclusion in a
negotiated agreement, except for the very smallest. So they will have the 80
per cent discount. They will also benefit from the reduction in National
Insurance contributions. So I think one needs to look at that wider picture
before drawing the conclusion that Mr Curry invites me to draw.
Mr Mitchell: You have just failed to get a commitment, which no
Treasury Minister has ever given anyway in advance. Let us move on to
rebates. Michael Jack?
Mr Jack
310. We are talking about the 80 per cent rebates. Why are these
not geared to precise amounts of energy saved rather than general agreements
to save energy?
(Mr Meacher) They are actually related to energy saved because an
industrial sector which is seeking a negotiated agreement has to convince my
Department that they have adopted cost-effective measures sufficient to
justify receiving the 80 per cent discount. We intend to make a rigorous
analysis on the basis of the ETSU figures of what that industrial sector can
achieve. So it is based on energy saved over and above what happens now,
business as usual.
311. Does this question of the agreement take into account
historic achievement?
(Mr Meacher) Yes.
312. How far back are you going?
(Mr Meacher) What we have said is that we are concerned to achieve all
reasonable cost-effective measures. If they have been achieved in the past,
all well and good. That will mean there is less to be achieved now than in
the future. If little has been achieved in the past then considerable
improvement is still required.
313. So there is no way that this 80 per cent rebate is a
negotiable item where you could have 90 per cent for somebody who has got an
extremely good track record but 70 per cent for somebody with not so good?
(Mr Meacher) What we have said is that you will only get it if we
achieve all cost-effective measures. If you achieve less than that you will
not get 70 per cent, you will get nil. So it is a very powerful whip to
ensure that industries achieve the full requirement which we think they are
capable of and which is also in their own economic interest. I would
underline that point.
314. When we started our inquiry we had a lot of concerns put to
us about what the definition of good quality combined heat and power schemes
was and since then you have published a consultation document which you are
attempting to elicit the facts on. Can I just ask you factually who have been
or who are in general terms the consultees on this?
(Mr Meacher) Who?
315. Who are the people who are the consultees? Is it aimed at
the level of the enterprise or the representative body or anybody who happens
to click on the web site or what?
(Mr Timms) This is the Customs & Excise consultation paper? It is
anyone who wishes to comment and, indeed, as Mr Jack says, it is on the web
site.
316. So you believe it is put out by Customs & Excise. According
to the copy I have, it says prepared and issued by the Department for the
Environment, Transport and the Regions and various other people but not
Customs & Excise. Is there another one?
(Mr Timms) There is indeed. There is a consultation document that has
gone out on the back of the announcement the Chancellor made in November about
exemptions from the Climate Change Levy for energy ---
317. They are not for combined heat and power, are they? My
question was that there was a concern in the horticultural industry
particularly and in other parts, e.g. the food sector, and British Sugar
expressed a concern about the definition of what was a good quality combined
heat and power scheme. You then issued a consultation document. I presume
the one you are talking about with Customs does something different from the
one that I have seen from my Michael Meacher's Department?
(Mr Timms) The two are being developed in parallel, but they are
separate documents.
318. Are you going to meet together to sort out any differences of
opinion?
(Mr Timms) Indeed.
319. The one the DETR has put out is the one that interests me
because it is the one I have seen. Who is it aimed at, is it the technicians
or growers?
(Mr Meacher) It is aimed at anyone who has an interest and wishes to
give their views about what good quality CHP implies and how the rules which
we have set out - they are pretty technical rules, but are those fair, are
they equitable and we are inviting anyone with an interest to give their
views.
320. Did this document cross your desk?
(Mr Meacher) No.
321. So you cannot tell me how this quality index, which is at
0.2.11 of 110, which seems to be a magic number plucked from wherever, is the
determinant of whether it is good or bad. This seems to be a very technical
document and I just worry about growers who want to say, "Have I got the
potential to have a combined heat and power scheme? How do I make myself
heard in a process ..." Looking at this document, it is cast in equations and
complex definitions not normally the language of every grower, perhaps the
bigger ones like VHB.
Mr Mitchell
322. British Sugar told us that your definition of what is a good
quality combined heat and power plant was going to be issued in November, but
they still had not got it. When is your definition going to be issued?
(Mr Meacher) I do not know the answer to that. Mr Jack has already
seen a document that presumably has detailed definitions of what good quality
CHP is.
323. That is a consultation document.
(Mr Meacher) You are talking about when will we get the actual
document?
324. Yes.
(Mr Meacher) I am sorry, I misunderstood. The consultation periods
are normally two or three months.
Mr Jack
325. It does not say. I think that is half the problem.
(Mr Meacher) They are normally two or three months and we then,
depending on the number of submissions, spend two or three months looking at
it, having further discussions and we would expect to issue something six
months from now.
Mr Mitchell: You can tell us that when we come to it. The question
from British Sugar was just about the timing of the result.
Mr Marsden
326. In the Pre Budget Report November 1999 around œ150 million
raised via the levy had been earmarked for measures to allow for the
introduction of a system of enhanced capital allowances for energy saving
investments. I do not pretend to understand what that means, however, how
will businesses be able to access those funds?
(Mr Timms) There are two elements to the œ150 million package. One is
a œ50 million fund of aid which was always part of the package. What is new
from November is the additional œ100 million in the enhanced capital
allowances. Again, we are consulting at the moment on the details of which
technologies for example should be eligible for support from those two
mechanisms. That consultation is running at the moment and when that is
concluded will be able to say in more detail both what sort of technologies
will be eligible but also what the mechanics will be for accessing that
additional help. I would just make the point, if I may, that it was a very
strong part of the consultative process we had on the original proposals in
March that a larger share of the levy take should be recycled into support for
firms to make energy saving investments. That is why we have increased the
sum from œ50 million to œ150 million. There was a suggesting on the front
page of the Financial Times today that there was something misleading about
the claim we had trebled that; I think that is quite wrong. In year one there
will be œ150 million available instead of the 50 million there would have been
before.
327. Is it possible to say how much of the fund would be allocated
to horticulture and agriculture?
(Mr Timms) No, we cannot say that at this stage. Certainly any
horticulture firm which wished to apply would be able to do so, but we cannot
say at this stage. I would not envisage that we would divide the fund up
between different sectors, I think it will depend on the proposals which are
made and it will be to a significant degree demand-led rather than defined by
us at the outset who will get what. Can I just say that it is an important
point to raise though because it is an important element for considering the
impact on each sector overall, but there will be the possibility of accessing
funds from this œ150 million.
328. Will you monitor that allocation when it is agreed, so you
will actually see if, to put it crudely, horticulture and agriculture do get
their fair share once you have put the mechanisms into place? If not, would
you then adjust it accordingly?
(Mr Timms) Certainly we will record by sector where that support goes,
so we could then carry out that kind of analysis.
329. A poultry processor argued that generation of overnight
electricity is greener, ie less wasteful, in terms of transmission losses and
type of power station used. Has consideration been given to tiering the levy
according to not only how but also when the electricity was generated?
(Mr Timms) No. I think I would caution against trying to make the levy
too complex and difficult. One of the key features of good taxation is that
it is straight forward and simple, and that is an important consideration in
the design of the levy which the current design reflects. So we have not
looked at that suggestion or other suggestions which have been made which
would make the process rather more complicated than it needs to be. I am not
sure it is true actually, if emissions are generated it does not matter
whether they are generated at night or during the day, so I am not sure what
basis there is for saying night time generation is greener.
330. Have you investigated that? You say you do not think so.
(Mr Timms) No.
331. Would you be prepared to investigate that? Clearly this
poultry processor believes it.
(Mr Timms) Michael is the environmental expert! I cannot see any
argument for saying night time generation is greener than day time.
(Mr Meacher) On your general point, it is an ingenious argument to
suggest that night time generation may have less environmental impact
therefore there should be a tiering of the levy. I just do not think one can
seriously calibrate a levy on the basis of that kind of data. I suspect if
you did so, you would find 101 other industries coming forward with special
pleading to say why they should get a lesser amount. We are proposing an 80
per cent discount and that is very substantial. The illustrative figure was
50 per cent, we have made it higher than many people expected and I think it
has to be, as Stephen has said, generalised. You cannot by all sorts of
ingenious arguments scatter it around an average figure.
(Mr Timms) The focus of the levy is carbon dioxide emissions and there
are as many of them at night as there are during the day, so I am not
persuaded at all by that argument.
332. Can I turn to the written evidence we have received from Mr
Stevenson who lives near Ludlow, Shropshire, not far from me, and what he has
drawn our attention to is that in a number of cases action to meet the closely
drawn IPPC criteria may well cause the farmer to fall foul of the climate
change levy. He has given a number of examples, one of which was where the
IPPC allowances which reduced emission in some cases have actually then
resulted in fans having to be fitted with scrubbers making the fans less
efficient and hence then, obviously, seen to be coming into conflict with the
CCL. I wondered what your views were on that. Are they incompatible?
(Mr Timms) Potentially I think that is a significant point. I think
there is a very strong argument for saying that these two need to be developed
together. I certainly hope we can co-ordinate the two obligations which are
imposed by the IPPC itself and those being imposed through the levy and in the
negotiated agreement because we do want to minimise the regulatory burden
which is imposed on sites. There are discussions to that end and I would hope
we could make some helpful announcements about that in due course.
(Mr Meacher) Our approach is to require firms to establish a base line
set of data in terms of site specific measures dealing with gross energy
wastage, designating an energy efficiency officer, preparing an energy
management plan, but there is no reason why having done that firms should not
then be impelled to go further, either through negotiated agreements or
through domestic trading schemes or through further site specific measures,
and that is what we would do. We would see them basically as complementary
and certainly not in conflict.
333. Do you not feel though that the levy actually discriminates
against agriculture? You talk about a rebate on national insurance
contributions but generally the agricultural industry is now not very
intensive in terms of labour and hence in terms of staff costs and therefore,
as a number of submissions have indicated, typically a producer now is looking
at an additional cost of 20-odd thousand for only being able to reclaim a few
hundred pounds from national insurance contributions. Clearly it seems to be
discriminatory against this sector.
(Mr Timms) I do not think it need be. I think it depends on what
happens. It depends on what happens to people's energy usage in the future,
the extent to which they are able to use combined heat and power systems and
renewable sources and so gain exemption as a result of that. It then depends
how much access they are able to make to the œ150 million fund. So I think
there is a range of considerations which need to be taken into account before
one could say that was or was not the case.
Mr Jack
334. The œ150 million which has been raised for capital
allowances, am I right in saying that effectively the industry is paying for
its own capital allowances? Secondly, could I ask if there is going to be any
roll-over relief in the way these allowances are constructed?
(Mr Timms) The 150 is divided into two categories. There is the 100
million in capital allowances and 50 million in a direct fund which people can
apply for. Yes, the 100 million is taken out of the overall take from the
levy but these will be 100 per cent capital allowances in the first year.
335. My question was about more than that. If you are not able in
the first year fully to utilise your capital allowance against a particular
investment, because at that time the business is unprofitable, will you be
able to carry over the effect of that allowance into subsequent years when you
may be in profit?
(Mr Timms) That is a very good question that I do not know the answer
to, but perhaps I could send a note to the Chairman and find the answer.
Mr Mitchell: Yes, thank you.
Mr Drew
336. Can I go on to IPPC implementation? I think that where there
is agreement across everybody we have talked to and, I am sure, across the
agriculture industry, it is that this is going to change the way in which we
measure emissions. Is there a case for a slightly lighter touch on the tiller
when it comes to the monitoring of those emissions? Clearly the biggest
concern is the cost or the charge for the monitoring of what agriculture
already does.
(Mr Meacher) I did say at the outset that we are concerned at the level
of costs which the Environment Agency has provisionally envisaged. I do
understand that people may initially regard them as high, and I did say that
we have asked the Environment Agency to look again at that, and that we will
not approve a level of charges which we do not think fairly reflects the
regulatory effort involved. So we are conscious of that, even though we are
talking about large installations. The application does apply, as you know,
only when I think there are 40,000 or more places for poultry, 2,000 places
for production of pigs and 750 places for sows. Those are quite large
institutions, and the great majority or a significant number will be below
that. The United Kingdom did, in the course of the negotiations in Brussels,
try to prevent the application of IPPC to agriculture. I have to say, we did
not get any significant support for that, and we were then obliged to shift
the line of our argument to accept that it would apply to agriculture, but to
raise the thresholds and to try to get easements in other ways, which actually
we did. Those figures which I have quoted are substantially higher than the
ones which were originally proposed by the Commission.
337. Would there be a temptation to reduce the thresholds over
time across Europe? Clearly we are in a difficult situation at the moment,
but one supposes, as you say and to my knowledge, that this is at the upper
end of these two particular sectors. Therefore, would you see it as an
implication that there will be a gradual reduction in the thresholds?
(Mr Meacher) I think that is unlikely, because having been persuaded,
not least at our behest, that the thresholds should be raised, I think it
would be very surprising if, in the short run at least, the thresholds were
now to be lowered. We did also get the replacement of some emission limit
values with technical control measures. We have, very importantly - and this
I think is again a particular UK contribution to the EU - insisted that we
must take account of costs and benefits together, benefits have to be
sufficient to justify the costs imposed. I think that is a very important
criterion, and we did press it hard.
338. Perhaps I could go on to look at the actual introduction of
these changes. Poultry farms come in from 2003 and pig farms come in from
2004. We hear a lot about best available techniques, but I understand that
because the consultation will not finish until 2002, that does not give either
sector very long to look at investing in new equipment to reduce their
emissions. Is there any possibility that you can either bring about
consultation so that you give it some clarity, or extend the timescale? I
know this is not necessarily within your permit, but you know what I am
saying, which is that there is a fairly tight timescale of a window of
opportunity of a couple of years.
(Mr Meacher) The UK guidance on farm standards is derived from the BAT
reference documents - Brefs, as I think they are called in the jargon. Those,
I understand, in the case of pigs and poultry sectors, will not be complete
until 2002. That does, however, give some time then for drawing up the UK
guidance and of course consulting with the pig and poultry sectors about its
application, and I think that a one-year or two-year period should be
sufficient for that purpose.
339. We are obviously talking at the larger end of the industry,
and it could involve some quite difficult investment decisions if they are
going to try to maximise the benefits and minimise the costs of these charges,
could it not?
(Mr Meacher) Yes, that is perfectly true. It is not as though it will
all be revealed to them in 2002. They are of course acutely conscious of this
regime coming into force, and they will certainly be in discussion with the
Environment Agency about what would be required of them. It is just that the
precise detail will not be on the table from the Commission until 2002. It
is also true that what is required under best available techniques may not
have to be applied immediately; there could be a time period for its being
brought into operation.
340. Could I ask, on a slightly different but related tack, about
the evolution of these public registers which we have already got in place but
which are obviously going to be beefed up somewhat? I am intrigued to read
that you can only exclude mentions on that register on the grounds of national
security or commercial confidentiality. What do we mean by "national
security" there? There is some nervousness in the industry about possible
animal welfare or, more particularly, animal rights action against certain
holdings. I wondered what this national security issue is. Is that already
in the statute?
(Mr Meacher) The answer to that is that I do not know. I am very
surprised. I must say, I cannot immediately see how national security would
be involved here, but again I will get that looked into and write a letter to
you.
Mr Drew: Thank you.
Mr Mitchell
341. The Chairman should not fuel all obsessions, but is it
correct, as was suggested to me by a couple of correspondents, that the size
limits were introduced at that level because most French family farms fell
below them, whereas most units of production for poultry, for instance, in
this country are above them - that is to say, they are 40,000 birds, for
example?
(Mr Meacher) I cannot possibly comment on that. It is true that the
Meat and Livestock Commission estimates that the coverage in the case of the
UK pig and poultry industry is substantially higher - something like 58 per
cent - whereas the EU average is about 38 per cent. I think that reflects the
fact that holdings in the UK, which may involve a number of installations, are
generally on a much larger scale.
342. Thank you for that little crumb to feed Euro-scepticism.
(Mr Meacher) You never miss a chance, Mr Chairman.
343. No, I shall not. It was the French who insisted on putting
this in. There is one further question which I put to the Environment Agency
and which they could not answer because it is a policy issue. Why bring this
in for poultry farms at 2003 when on 1 January 2003 the new Caged Bird Welfare
Regulation comes in requiring them to reduce the numbers of birds by cage by
one - in other words, there is going to be a steep drop in the size of many
units of production and a real problem of adjustment and investment in new
cages at the same time as the IPPC comes in? Why not put it back a year?
(Mr Meacher) One can always find reasons for not applying regulations.
344. But you are applying them at a time of maximum chaos.
(Mr Meacher) Again, I have not myself considered that. I think it is
basically a matter for MAFF but again I will look into that and again we will
give you a view on that. I am not sure that it would have the major effect
which you seem to be suggesting and I would have thought there could be
arguments for trying to introduce these regulations at the same time rather
than one after the other. But we will look into that.
Mr Mitchell: Thank you.
Mr Marsden
345. To follow that up, who decided to introduce the IPPC
regulations for poultry farms in 2003 and pigs in 2004?
(Mr Meacher) The Environment Agency.
346. Funny enough, when I asked them that question, they said the
DETR and, when pressed, they said ultimately it was the minister.
(Mr Meacher) I can certainly say that it never came across my desk that
the order of application of IPPC to different sectors should be decided by
ministers. It is possible that it went to MAFF, it certainly did not come to
me. I am surprised. This is a technical question. I accept that the state
of the pig and poultry industry, and in particular agriculture as a whole, is
sufficiently serious that there are clear political implications in that.
347. So would you be prepared to investigate the reasons for that?
Perhaps the answer has arrived - a piece of paper has been passed to you.
(Mr Meacher) I do not think that answers it! It merely says, "The
order of phasing will be in DETR regulations", well we know that, of course
it will be in the DETR regulations. The question was, who made that
particular choice. I am saying it certainly did not come to this minister.
348. So you are prepared to investigate with MAFF and with the
Environment Agency to find out the reasons for that and find out the basis on
which this has been derived?
(Mr Meacher) Certainly.
349. My colleagues on the Committee have eaten away at most of my
line of questions on IPPC charges but let me see if I can gather together and
clarify some of these questions. Based on the fact that the Scottish
Environmental Protection Agency have proposed charges which are about half
those from the Environment Agency governing the England and Wales IPPC, how
can charges for the same inspection process be so different?
(Mr Meacher) I did try to answer this earlier. There are two elements
in the charges. One is the application charge and the other is the annual
subsistence charge. In the case of the Scottish Environment Protection
Agency, the application fee is substantially higher but ---
Mr Todd
350. Higher than what?
(Mr Meacher) Higher than the UK application fee.
Mr Curry
351. England.
(Mr Meacher) But the subsistence charge, or the annual charge, is
lower. So I do not think one can directly make those comparisons.
Mr Marsden
352. We have been told that the Scottish Environment Protection
Agency are proposing a charge of a minimum of œ7,894 for initial registration
and the annual charge is œ2,674, ie still half of both.
(Mr Meacher) Certainly as compared to the figures which I indicated
originally of 12 to 18,000 for the initial application - these figures are the
ones which the Environment Agency provisionally came up with and which we have
asked them now to look at - and œ7,000 in subsistence charges. I accept they
are substantially higher.
Mr Todd
353. In both cases.
(Mr Meacher) In both cases on the figures you have quoted.
Mr Marsden
354. Why?
(Mr Meacher) You should have asked, and perhaps you did ask, the
Environment Agency.
355. We did!
(Mr Meacher) They picked the figures. We have said they are high.
Rather than simply make comparisons with what may be decided in Scotland, we
have to look at whether they are fair figures in terms of regulatory effort,
and our judgment is that they are high and that is why we have asked the
Environment Agency to look very carefully at them.
Mr Jack
356. So the Environment Agency are just plucking numbers out of
the ether, are they?
(Mr Meacher) No, I am sure they are not doing that. I am sure, if you
ask the question, and I believe you did, you will have received their answer.
Mr Jack: Their answer was very simple. They said that the Scottish
Agency got more grant-in-aid than they did and that is what was reflected in
this differential of charges. Would you agree with that?
Mr Mitchell: I think that is an unreasonable question. What they said
was they were going to consult with the Scottish Agency.
Mr Curry: No, they said they got more money.
Mr Mitchell: They said they got more money and that was, it was
inferred, subsidising the lower level of charges, but they also said they were
going to consult with the Scottish Agency on the basis of charging. Let us
carry on with Mr Marsden.
Mr Marsden
357. They also said that they thought you had made a mistake and
should have done so in the first place. Moving on though, would you therefore
be consulting with your Secretary of State for Scotland and, if appropriate,
the Scottish Parliament, to find out how we can compare these two sets of
figures and perhaps find a common charging scheme?
(Mr Meacher) Under devolution, of course, charges are determined in
each separate case. There is no requirement for them to be comparable.
358. There is no requirement, it is whether you would be prepared
to.
(Mr Meacher) Of course, we will look at the Scottish situation, but I
repeat, the real issue is that the charges should be fair and equitable for
the regulatory effort involved and that they do not bear harshly or unfairly
on the industry.
359. Very well. I know some of my colleagues have supplementary
questions, but I have one more question to ask. You may have answered this.
Have you made any assessment of the impact of the IPPC charges on the
competitiveness of UK agriculture?
(Mr Meacher) Since the IPPC charges have not yet been determined, and
since -----
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.
(Mr Meacher) 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 œ1,000 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.
364. 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.
365. 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
-----
366. No, I understand that. I mean other than that.
(Mr Meacher) That requires the authorities to recover their regulatory
costs.
367. 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.
368. 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.
369. 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
370. 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.
371. 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
372. 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.
373. It was not mine.
(Mr Meacher) Environment, of course, is a devolved issue.
374. 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.
375. You might want to clarify that in your note.
(Mr Meacher) If I am wrong, I will do so.
Mr Hurst
376. 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.
377. 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 level 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.
378. We have heard evidence from the British Egg 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.
