House of Commons - Environment, Transport and Regional Affairs

Select Committee on Environment, Transport and Regional Affairs Sixth Report

THE ENVIRONMENT AGENCY

ATTITUDE TO REGULATION AND RELATIONSHIP WITH INDUSTRY

64. At an operational level, relations between Agency inspectors and industry seem generally to be good[129] (although, as we mention above, problems remain particularly in the waste management sector with inspectors with insufficient expertise[130]). However, a number of issues were raised regarding the Agency's attitude to regulation and its relationship with industry. These are examined below.

Availability and clarity of guidance

65. We heard evidence from industry that the Agency has not been making all its regulatory requirements clear to those it regulates. A particular complaint was that the Agency was issuing guidance notes to its staff on how to implement its policies, but that those notes were not being made available to industry.[131] Graham Watson, of the Environmental Services Association, for example, told us, "There is a lack of transparency undoubtedly in some of the published policy and guidance. We have examples with the enforcement and prosecution policy where that was in existence and was being used by Agency staff for between seven and eight months before it was made available to the industry. Behind that is a series of guidance notes that teach or instruct the Agency officers how to use it."[132]

66. The Agency responded in detail to these and other similar complaints from witnesses in a later supplementary memorandum.[133] The thrust of this memorandum is that the particular instances complained of were largely due to transitional phases during which guidance was being revised and updated. They assured us that all national policies, procedures and technical guidance is normally made available to all with an interest in seeing it.[134] This confirmed the Chairman's statement in oral evidence that "the transparency of our policy and practices should be absolute".[135] We welcome the Agency's commitment to openness, and we strongly encourage it to continue to give priority to the clarity and openness of its regulatory requirements and to seek further ways to improve such clarity and openness.

Radioactive substances

67. There is a particular problem in respect of guidance in the area of regulation of radioactive substances. The Radioactive Waste Management Advisory Committee (RWMAC) drew attention in their written evidence to the lack of adequate explanatory material on radioactive waste management and discharge regulation. They noted that the last set of guidance for users on the application of the relevant legislation, Radioactive Substances Act 1960, A Guide to Administration of the Act, was published in 1982, and refers to the 1960 version of the Radioactive Substances Act, which has been amended several times since. Furthermore, they note that the most recent statement of Government policy on radioactive waste discharges, contained in the White Paper Review of Radioactive Waste Management Policy: Final Conclusions (Cm 2919), dates from 1995, and may have been superseded by the UK's accession in July 1998 to an agreement to further 'substantial' reductions in radioactive discharges (under the 'OSPAR' convention, on Protection of the Marine Environment of the North East Atlantic).[136]

68. The consequences of the lack of a clear, up-to-date statement of regulatory principles, they suggest, are as follows:

insufficient formulation and understanding of the principles and objectives behind the regulation of radioactive discharges;
protracted decisionmaking in respect of some of the major radioactive waste discharge authorisations;
uncertainty on the part of industry as to what is required of them;
inability of the public to participate meaningfully in the consultation exercises carried out by the Environment Agency.[137]

69. Professor Charles Curtis, Chairman of the Radioactive Waste Management Advisory Committee, explained these concerns further in oral evidence to us:

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70. The Radioactive Waste Management Advisory Committee's concerns are, naturally, shared by those in industry who are subject to radioactive substance regulation by the Environment Agency.[139] David Coulston, Director of Environment, Health and Safety at British Nuclear Fuels Ltd, told us, "At the moment we are lacking in the principles and criteria and the methodologies and the processes that go with those. The outcome ... is that the arrangements before us are somewhat ad hoc and result in extremely long timescales from application to determination."[140] He continued, "Without clear principles, criteria, methodologies and processes then it becomes increasingly difficult for any stakeholder group to understand the due process."[141]

71. It is of particular concern that both the Radioactive Waste Management Advisory Committee and those in industry who are subject to radioactive substance regulation have been discussing this issue with the Department for the Environment and its successor Department for the Environment, Transport and Regional Affairs for some considerable time, with as yet no positive outcome.[142] It appears that the Agency is working almost in a vacuum where regulatory principles are concerned, with the result that neither they, nor those whom they regulate, nor the general public, can be clear about what is required in this area.[143] We strongly urge the Government to produce as soon as possible, in consultation with the Agency, a clear statement of regulatory policy and practice in the area of radioactive substances and waste.

Consistency between regions

72. We received a considerable amount of evidence of inconsistency in the advice given to industry by Agency personnel in the various regions of the Agency. Typical comments included those such as the following, from Biffa Waste Services: "examples of geographic variations of interpretation in standardised policies are legion throughout our industry"[144]; or from the Electricity Association: "When our members covering different regions have asked local inspectors for advice on certain activities, that advice has not always been consistent, making it difficult to implement actions on a company-wide or national basis"[145]; or from Brian Duckworth of Water UK, who told us, "We do not have consistency yet and I think that is what we would all like to see, a more consistent approach, consistent across the different operating regions and perhaps more consistency between head office in Bristol [and] the operating regions ... Within regions you sometimes get some differences because you have got local officers managing their jobs on a daytoday basis locally."[146]^,[147]

73. We do not regard inconsistency between regions as undesirable per se. Regional inconsistency can reflect genuine local differences and necessary variations in approach, as recognised by many of our witnesses.[148] Furthermore, as Ian Bonas, Chair of the Agency's Regional Environment Protection Advisory Committee for the North-east, told us, there is no evidence of serious problems arising in terms of people being put out of business or jobs being lost.[149] Indeed, it was suggested to us by witnesses from the Chemical Industries Association and the Confederation of British Industry that differences in approach between the regulatory authorities in the UK and those in other countries, particularly in Europe, was more of a problem than inconsistency of approach within the Environment Agency.[150]

74. However, there is a difference between regional differences which are clearly thought out and rationalised, and those which arise simply from inefficient management. The evidence we have received suggests that perceived inconsistencies in approach within the Agency are symptomatic of the more fundamental problems of poor internal communication within the Agency and the ineffectiveness of the matrix management system. The Chemical Industries Association, for example, noted, "There have been occasions where inspectors in the field have not been properly briefed on a decision made at national level. We are also concerned at the practice of guidance being developed in different regions on the same issues, which leads to inconsistency in timing and application and lack of central agreement on approach."[151] This concern was echoed by Water UK, who wrote, "There can be considerable confusion as to how the Environment Agency operates between its national, regional and area offices. Sometimes relationships set out on paper are not borne out in practice ... There appear to be significant communication gaps, with regions being slow to take up national guidance in some areas."[152]

75. Elizabeth Jenkins of IPMS told us

153

76. These comments merely serve to confirm the conclusions we have already reached regarding the ineffectiveness of the Agency's current management structure. Inconsistencies in policy and practice between the different regions of the Agency should be limited to those areas where they are a result of a genuine need for local differences in approach (such as to reflect the different ecological nature of river catchments in different areas of the country, or to take account of regional sustainable development strategies) rather than a lack of clarity of policy or a failure effectively to communicate national policy and standard working practices to local staff. Furthermore, we note that, if the guidelines within which both the Agency and industry are supposed to work are as clear and open as is claimed by the Agency, there should be no reason for regional inconsistencies other than those to which we refer here.

Time taken to deal with issues

77. As mentioned earlier, many witnesses reported that the Agency was taking an excessively long time to deal with issues arising out of its regulatory role. Water UK, for example, wrote, "The Environment Agency exhibits many symptoms of being overly bureaucratic with an insatiable desire for information coupled with an unacceptably slow speed of response. For example, it can take 12-18 months to process consent applications."[154] The Quarry Products Association claimed, "Our members frequently ask us to intervene on their behalf where abstraction, discharge and waste management licences have been delayed ... Our members report increasing delays caused by the Environment Agency in this respect."[155] Such delays include failures to respond to certain applications within the statutory time limit: a problem which has occurred chiefly in the waste management function, to which we have already referred, but which is by no means confined to it.[156]

78. The response of the Agency's Chief Executive to these criticisms was to claim that the Agency ought perhaps to be taking even longer to process applications. "I would be very worried," he said,

157

79. We have discussed above some of the problems within the Agency which may lead to delays in processing applications and resolving difficult issues. The very necessary process of arguing through those difficult issues is not by any means the only, or even the main, reason for such delays. Consultation can be managed efficiently and need not be a major source of delay. Public inquiries are only relevant in a few cases and then generally only after the Agency's decision. Delays appear often to occur after consultation and to reflect internal confusion or lack of flexibility. Nor is it necessarily the case that speed of decision and quality of decision are directly related. In an efficient organisation, rapid decisions can be taken (where necessary) without compromising quality. The Agency operates a management structure which inserts layers of general managers between staff on the ground and those who are senior enough within a specialism to deal with particular issues.[158] It also has poor internal communications which hinder the necessary flow of information between those different parts of the Agency which must get involved with an application.[159] These factors combine to frustrate not only those within industry, but also Agency staff who have to deal with industry themselves on a day-to-day basis, in cases where speedy decisions are desirable - or, in some cases, necessary.

80. We agree with the Chief Executive that an Environment Agency ought not to be judged solely on administrative measures such as speed of response - we come on to the matter of how the Agency's performance ought to be judged later in this Report.[160] We also accept that the Agency must deal with such applications thoroughly and in a manner which, where appropriate, allows for full public consultation. However, if the Agency is to retain credibility as a regulator, it must ensure that it is, and is seen to be, operating with maximum efficiency. The Agency must therefore take steps to deal with the problems which lead to inefficiency and delay and put itself in a position to respond to applications and other issues which arise during the regulatory process within an agreed timeframe.

Fees and charges

81. A particular concern of industry was the Agency's level of charging. The Agency is required by the Treasury's Fees and Charges Guide, and its own Financial Memorandum, to recover all relevant costs associated with its regulatory activities. As a result of the Government's policy of ensuring that the polluter, rather than the taxpayer, pays for environmental regulation, and the consequent decrease in Government grant-in-aid,[161] plus the large number of new duties that have been placed on the Agency since it was formed,[162] the Environment Agency's charges have increased significantly in recent years. As an example, Dai Hayward, Director and General Manager of Thomas Swan & Co., a speciality chemical manufacturer, told us that his company had experienced two successive years of 15 per cent. a year increases in charges for environmental regulation, and that this was to be followed by a 20 per cent. further increase on the introduction of the Integrated Pollution Prevention and Control regime.[163]

82. The figure of £1215 per day, being the daily (unit) charge for an Integrated Pollution Control inspector for 1999-2000,[164] was the focus for much of the concern expressed by industry. However, complaints were directed less at the level of the charge itself - though it was agreed that it is very high, in line with top-level consultancies, and is significantly higher, we were told, than the charges levied by, for example, the Health and Safety Executive or the Scottish Environmental Protection Agency[165] - than on the fact that the make-up of the charge was not clear or justifiable. The Chemical Industries Association, for example, wrote, "We believe that such an increase goes well beyond what would reasonably be expected of an efficient cost recovery regime and that the Agency is in danger of losing credibility with the operators by such action. Much greater transparency is required in the Agency's calculations for charging rates to demonstrate that operators are being treated fairly."[166] The National Farmers' Union were "particularly concerned by the Agency's inability or unwillingness to justify its charges ... it has proved difficult to obtain information to justify the charges, and this often leads us to conclude that [they] are in fact unjustifiable."[167] Such concerns were shared not only by others subject to the Agency's charging regime,[168] but also to those representing the Agency staff for whose time they are being charged. The Institution of Professionals, Managers and Specialists wrote, "We believe that an excessive portion of income derived from industry on a cost-recovery basis is being diverted away from PIR/RSR regulation into overheads or other activities. Out of a combined total income for PIR and RSR of some £26 million, this only seems to support a direct PIR/RSR staff of about 180."[169]

83. We were surprised that the Agency's Director of Operations was not able to tell us when he appeared before us what the breakdown of those charges was.[170] If this information is not immediately available even to such senior Agency officers as the Director of Operations, it is no wonder that industry itself is unclear exactly what it is being asked to pay for. Furthermore, we were unconvinced by the analysis of the IPC daily unit charge with which the Agency later provided us.[171] A breakdown into just four separate areas does not greatly increase transparency. If the Agency is to maintain the confidence of those whom it regulates, it must ensure that the justification for its charges is clear.

84. Complaints about the level of charging are given further resonance by the fact that, as we have noted above, industry is in many areas not yet receiving an acceptable level of service. The Environmental Services Association, trade association for companies in the waste management sector, which has experienced particular problems since the formation of the Agency, complained, "The 15 per cent. subsistence fees increase in 1999-2000, after a 20 percent. increase the previous year, must be fully justified to operators paying for what can at best be described as a patchy service."[172] Such complaints were by no means confined to the waste management sector, however: Edward Hyams, President of TXU Europe Power, told us, "The sorts of fees, the daily rates that we see for processing and variation, are in the order of £1,200 a day, so it is not insignificant. They are in line with a top level consultancy in terms of the sorts of fees that you pay for a middle level consultant. That would be fine if the speed and the response and the sorts of things that we see are commensurate with that. I think our concern is more about is the performance and management system and everything else commensurate with the level of fees rather than the level of fee per se."[173]

85. The Agency's later explanation of the reasons why their charges were not comparable to those of top-level consultancies was no more convincing than was its breakdown of those charges. The costs of technical support work, policy development, research and development, &c. to which it refers would equally be applicable to a commercial consultant's fees - and they would also, of course, have to include a profit margin. If industry is to be charged in line with a top-level consultancy, it can reasonably expect to receive a commensurate level of service. In particular, this means that, as we have noted above, the Agency should provide them with swifter responses and properly qualified, adequately experienced staff.

Incentive charging

86. It was suggested to us by the Agency that cost-recovery charges should be replaced by charges related to the environmental burden caused by a company's activities. "These charges," it wrote, "should be incentive based, so companies who pollute more pay more and those that pollute less pay less."[174] This proposal received a certain amount of support from other witnesses - the United Kingdom Environmental Law Association Practice & Procedure Working Party, for example, noted, "many clients ... do not see fees they pay as related to the actual input necessary by the Environment Agency to supervise their processes. Businesses which operate well-regulated processes requiring few supervisory visits from the Environment Agency pay the same as the poorly managed process requiring frequent intervention"[175] - but others responded cautiously to the idea. Dr Brian Count of National Power made the point that 'incentive charging' may only be able to take account of the volume of pollution produced by, for example, a large power station, and not of the improvements which a company had been able to make. He suggested that it might be better to encourage improved environmental performance by the use of published performance measurements.[176]

87. We agree that 'incentive charging' sounds good in principle, and we would support a charging system which gave companies an added incentive to reduce the environmental impact of their operations. However, we recognise the advantages of the current cost-recovery basis for charging in terms of companies only paying for the service they receive. Any scheme of 'incentive charging' would have to be carefully designed to ensure fairness, and it would be particularly important that our previous Recommendation regarding the clarity of the basis for the charges continue to be observed.

Use of data on environmental performance and the 'Hall of Shame'

88. The publishing of data on the environmental performance of individual companies, in order that the general public may make judgements about the merits of those companies, has been given a great deal of prominence in recent times, particularly by campaigning NGOs such as Friends of the Earth.[177] Such data have been made available for some time by the Environment Agency and its predecessor bodies, initially through the Chemical Release Inventory, later to become the Pollution Inventory. However, the most high-profile exercise in 'naming and shaming' has been the 'Hall of Shame', available to the general public by means of the Agency's website. Also published on the website was a 'Hall of Fame', showing those companies which achieved the biggest reductions in pollution.[178]

89. During the course of this inquiry, we received many complaints about the 'Hall of Shame'. These complaints focused not on the fact of the Agency's decision to publish league tables of environmental performance data, which was generally recognised as a legitimate role for an environmental regulator, but on the basis on which the tables were compiled and on the way in which the exercise was carried out. Paul Woodcock of Anglian Water Services, for example, said, "I am entirely happy with league tables, but they have got to be operated on a level playing field with a degree of fairness about the information that is collected. This is the main bone of contention that I have with the hall of shame, that it is based on imprecise information."[179] Biffa Waste Services wrote, "The basis on which the Environment Agency [has] drawn up [its] halls of shame appears arbitrary and is based on randomly selected time periods. The policy smacks of an immature approach designed to appeal to tabloid journalists and does not reflect any firm scientific basis using published criteria aimed at exposing organisations which have a genuine cynical disregard for pollution issues ... We can only interpret the Agency's strategy in this area as one which seeks cheap publicity at the expense of scientific credibility."[180] The allegation of seeking cheap publicity was echoed by the NGO Waste Watch, which was "concerned that relations between the industry and the Agency may not have been helped by the Agency's recent 'Hall of Shame' exercise, which seemed to be designed primarily to raise the public profile of the Agency, and not necessarily designed to encourage better practices on the part of industry."[181]

90. The Agency's response to criticism of the 'Hall of Shame' was to acknowledge the complaints about the basis on which it was done, but to claim nevertheless that it had had a number of desirable effects. "I think there were very good points made at the time," said the new Chairman,

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91. Our concerns about the 'Hall of Shame' lie in two areas. Firstly, the crude measure which was used by the Agency to assess environmental performance - the level of court fines awarded against a company for environmental offences - is not an accurate reflection of a company's environmental record.[183] Not only is it the case that offences deemed 'environmental' are not always actually damaging to the environment - the Environmental Services Association, the trade association for the waste management industry, for example, gave us the example of one of their companies which had been fined for failing properly to display a noticeboard[184] - but the level of fines for environmental offences is notoriously unreliable.[185] We return to this latter point below.[186] In addition, this measure is unfair on larger companies with a greater volume of operations whose exposure to possible prosecution is therefore that much greater.[187] The Agency should have been well aware of all these matters at the time when the 'Hall of Shame' was first mooted.

92. Secondly, it is our opinion that the Agency's handling of the publication of the 'Hall of Shame' was indicative of a serious lack of judgement. We note the suggestion made by some witnesses that the exercise was used chiefly as a means of raising the Agency's profile. Whether or not this is the case - and we have heard nothing to contradict the witness who claimed to "have attended meetings at which it was quite explicit from the Agency that the prime objective of the 'Hall of Shame' was to gain publicity for the Agency"[188] - the 'Hall of Shame' seems to have done nothing either to protect or enhance the environment or to improve relations between the Agency and the industries which it regulates. Rather than a means of encouraging companies to improve their environmental performance, the Agency's 'naming and shaming' policy appears generally to be seen as a PR exercise which badly backfired. We welcome the fact that the Agency has been listening to the complaints of industry groups and others about the exercise, and we note that these particular league tables are no longer available on the Agency's website.

93. We welcome the Agency's commitment to putting information about companies' environmental performance in the public domain.[189] However, if it is to achieve the end of encouraging companies to lessen the impact which their activities have on the environment, a great deal more thought must be given to the way in which it is done. We are very much in favour of the concept of 'naming and shaming', which has an important role to play not only in ensuring that companies take their environmental responsibilities seriously and in securing improvements in environmental performance, but also in making the public more aware of the environmental impact of industry. However, it is essential that it be done on a fair, consistent and professional basis.

94. During our visit to the Environment Agency's South Western Region, we were shown the Agency's Environmental Data Management System, which is capable of managing very large amounts of information from the Agency's databases across the country. One of the benefits of an integrated Agency is that it is able to bring together data about various aspects of a company's environmental performance. We believe that making this information publicly available would be a powerful way of helping to raise standards of performance across the board.[190] We recommend that the Agency, in consultation with industry, develop appropriate performance indicators which can be used fairly and consistently to assess individual companies' environmental performance. Tables based on these indicators should then be published to enable the public to make their own judgements about companies' contributions to sustainable development.

Court fines

95. Consideration of the 'Hall of Shame' leads us to another point which concerns us, which is the consistently low level of court fines for environmental offences. We recognise the fact that there have been some notable exceptions recently, not least the court's commendable decision to impose a £4 million fine in the Sea Empress case.[191] Nevertheless we remain concerned that the efforts of bodies such as the Environment Agency are being undermined by the failure of courts in the vast majority of cases to treat environmental offences with the seriousness they deserve. The Agency itself is also concerned about this problem: in written evidence to us they said, "Despite the large penalty in the Sea Empress case, fines are generally small in relation to the turnover or profits of companies, although there is no limit on what can be imposed by the crown court. A fine of £7,000 for one million gallons of largely untreated sewage discharged into a marina on a Bank Holiday, and a £20,000 fine for a company which saved £180,000 by illegally disposing of waste send the wrong signals to Board rooms. Bigger penalties from the courts are needed."[192] If companies are to take their environmental responsibilities seriously, public disapproval through league tables of environmental performance must be backed by serious financial penalties for significant breaches of environmental law.

96. In response to the perception that the overall level of fines imposed by the courts had been too low, on 29th July last year the Home Secretary directed the Sentencing Advisory Panel, under section 81(3) of the Crime and Disorder Act 1998, to examine the issue of sentencing for environmental offences. The Sentencing Advisory Panel's Advice to the Court of Appeal was published on 1st March this year.[193] The Advice makes a number of suggestions as to how more appropriate and more consistent sentencing for environmental offences can be achieved, and proposes that the Court of Appeal frame a sentencing guideline on environmental offences. We strongly support the Sentencing Advisory Panel in its advice that the Court of Appeal frame a sentencing guideline on environmental offences. We recommend that, following publication of this guideline, the Government keep under review the courts' sentencing for environmental offences, with a view to taking further action if the new guideline does not prevent the courts from continuing to fail to treat environmental offences with the seriousness they deserve.

97. The Sentencing Advisory Panel also put forward a number of further points for the consideration of Ministers.[194] Firstly, it noted that consistency in sentencing required that fines should have an equal economic impact on companies of different sizes. Not having been able itself to suggest a particular formulaic approach (based, for example, on a percentage of a company's turnover, profitability or liquidity) it suggested that the whole issue of the sentencing of companies be subject to a more extensive and specialist review. Secondly, the Sentencing Advisory Panel recognised that companies could be damaged by the publicity arising from a prosecution or conviction, as well as by the financial impact of a fine, but noted that the extent of bad publicity in a particular case was largely a matter of chance. It therefore suggested that companies should be required to publish details of convictions of environmental offences in their annual reports. Finally, it said that it believed that compensation orders should be used more widely in cases involving environmental offences. At present, magistrates' courts are limited to a maximum compensation order of £5,000. The Panel suggested that a higher compensation limit would enable magistrates to use their powers more effectively.

98. We also support the Sentencing Advisory Panel's recommendations to Minsters regarding sentencing for environmental offences. We therefore recommend:

that the Government instigate a review into the sentencing of companies for environmental and other offences. This review should make proposals for measures to ensure that the penalties imposed have a proportionate effect on all firms. It should also make proposals for measures to provide companies with a financial incentive to take the right environmental option rather than to cut corners to the detriment of the environment, by ensuring that the level of the fine is always more than any financial benefit gained from the offence, as well as reflecting the level of environmental damage or risk involved;
that companies be required to publish details of convictions of environmental offences in their annual reports;
that a higher limit be set for compensation orders imposed by magistrates' courts in the case of environmental and other offences.

Engagement with senior people from industry

99. All the industry representatives from whom we heard evidence claimed that they take their environmental responsibilities seriously.[195] Nevertheless, there is still a very long way to go before it could be claimed that this country has achieved environmentally sustainable development. The Agency has a very important role to play in ensuring that sustainable development considerations are taken into account at all levels within industry, from boards downwards.

100. At an operational level, Agency inspectors have of course very close contact with industry on a regular basis. However, we are concerned that the same could not always be said of Agency senior staff, or Board members, and industry board members. Although the problems which the Agency has experienced in the waste sector have necessitated regular meetings between senior Agency staff and representatives of the waste management industry,[196] the Agency does not appear to be actively seeking meetings with other senior industry figures to raise issues of importance in the environmental field. Indeed, witnesses from the water industry even claimed that regular requests on their part for meetings with the Agency were being continually turned down.[197]

101. In written evidence to us, the Agency suggested that company directors should be given environmental responsibilities, and mandatory environmental reporting and accounting should be included in the Companies Bill.[198] These are ideas with some merit, which deserve careful consideration. However, we find it disappointing that the only suggestion the Agency made about how it could itself gain more attention for environmental issues at board level was to suggest raising its charges.[199]

102. Agency senior officers and Board members should be more active in seeking to meet senior people in industry to discuss environmental issues. If the Agency is to make a serious contribution to sustainable development, it must get involved at all levels of industry, not merely - important though it is - in the regulation of particular industrial processes.

Measuring effectiveness

103. The Environment Agency is a very large body, employing some 10,000 people and spending over £600 million of public money each year. It also plays a vital role in regulating some of the major industries which contribute billions of pounds every year to the UK economy. It is very important therefore that it be able to demonstrate clearly that it is offering value for money and operating effectively.

104. The Agency has a number of performance indicators across the range of its functions against which it can be measured and its contribution to sustainable development assessed. 'Key performance targets' are published in the Agency's Corporate Plan, along with an assessment of the Agency's progress so far towards them, and proposed future action. Progress against 'key performance targets' is also reported in the Agency's Annual Report. The Report provides a useful means of assessing the Agency's performance, although the most recent Annual Report omits to mention some areas where progress has been less satisfactory: there is no information, for instance, on the time taken to determine applications for waste licences, nor on the Agency's progress in completing the four-year statutory reviews of IPC authorisations - both areas where the Agency has been severely criticised in the past for inadequate performance.

105. Some attempts at providing targets for the Agency have been crude and counter-productive. These problems have not been entirely of the Agency's making. Witnesses, for example, referred to the unhelpful targets for numbers of waste management inspections set in DETR's Waste Management Paper 4. The imposition of these apparently arbitrary targets encouraged staff to visit the largest possible number of sites in the shortest possible time, and discouraged visits to what may be the more "difficult", time-consuming sites.[200] This has been a major contributory factor to the problems which the Agency has experienced in the waste management sector.

106. The problem is not confined to the waste management sector, however. We have already discussed the problems which the performance-related pay system as it is currently operating throughout the Agency has caused, noting that Agency staff operate in a framework of performancerelated incentives which attach more importance to quantity rather than quality of work done.[201] Alan Broughall of UNISON told us, "Within the organisation we have what are termed operational performance measurements, OPMs, and there seems to be an obsession with these statistical pieces of information which is generally measuring quantity and not quality of the work that has been undertaken. Achieving quantity targets is detrimental to high quality work."[202] The same point was made by the Chemical Industries Association, who wrote, "a 'check-list' approach gives easily reported performance data, but does not necessarily result in improved environmental performance."[203]

107. The Agency should be taking further steps to measure its effectiveness by outcome, rather than by process. The problems which the Agency have experienced in the waste management sector have shown what can happen where quantity is given precedence over quality. Naturally it is important that the Agency continue to monitor its performance against its statutory responsibilities, such as that to respond to applications for waste management licences within four months. Nevertheless, its primary statutory responsibilities, as we have already noted, are to "protect and enhance the environment", and to "contribute to sustainable development". These are the primary criteria against which the Agency's performance, across all its functions, should be judged.

108. We recognise that the Agency has already taken some steps towards ensuring that its performance is judged by outcome, rather than by activity. It has, for example, set itself targets for achieving reductions in substantiated water pollution incidents, and for reducing emissions of various air pollutants.[204] The Chairman of the Agency also indicated to us during oral evidence that he expected further progress to be made when the Agency's new draft environmental strategy was published.[205] We commend the progress which the Agency has been making in this area, and we recommend that it continue to develop and refine indicators against which its performance in protecting and enhancing the environment and contributing to sustainable development across the full range of its duties can be measured.

129 Q314 Back

130 See paras 38 to 40 above. Back

131 See, for example, ev p.65 (EA29); p.75 (EA33); p.113 (EA54); Q498 Back

132 Q152 Back

133 Ev vol II p. 133-135 (EA62(d)) Back

134 QQ641-646 Back

135 Q641. See also Q646 Back

136 Ev pp.54-55 (EA26) Back

137 Ev pp.55-56 (EA26). See also Q219; Q248; Q269. Back

138 Q260 Back

139 Ev p.80; pp.150-151; ev vol II p.132-133 (EA78) Back

140 Q218 Back