Examination of Witnesses (Questions 40
WEDNESDAY 28 MARCH 2001
40. But that is not good enough, is it? The
burden of your complaint against Dr Aickin was not that you were
not capable of refuting or did not want to refute what he said.
The burden of your complaint was that he thought strategically,
put it into some kind of context and then asked you awkward questions
you did not even want to consider.
(Lord Cranbrook) Many of the questions that were brought
to us through Dr Aickin's submission were, as Dr Sills has already
explained, outwith our capacity as regulator.
41. With the greatest respect, my Lord, you
just recently said in your reply to Mr Blunt "it is not a
matter for me, I do not really have to consider that". In
fact, what Dr Aickin was doing, he was doing you a favour. He
was forcing you to consider not only the role of a private company
that is entirely funded by public money but whether you were capable
of moving on and whether you were fulfilling the job. You chose
to interpret that as an attack upon presumably your abilities
and your personnel, which I think is an extraordinarily narrow
response, but in fact you are still not answering the question
because Dr Aickin's complaint was not just about what you had
done, it was what you were going to do, where you were going and
how that fitted into the scheme that you were lumbered with. Why
is it that you find that so destabilising? You reacted in the
way in which you did likeif you will forgive my saying
sopetulant schoolgirls because he had actually said things
you did not want to answer.
(Lord Cranbrook) Please, you respond because I have
(Dr Sills) He said things we cannot answer. As Lord
Cranbrook has said, they are outside our remit, they are outside
42. But Lord Cranbrook has just said you do
not even have an opinion on these things. You said you work in
relation to Customs and Excise. You keep your heads down and your
mouths shut and you hope nobody will examine the role of the company,
is that it?
(Lord Cranbrook) Well, that would be a gross distortion
of what we do. Naturally as individuals we may have opinions but
our duties under our terms of approval are to regulate the scheme
as the scheme is laid down under the regulations.
43. You do not see any system in which you can
allow a criticism of that that cannot be interpreted as a personal
attack? You are not prepared to enter into any debate with someone
who you yourself say is extremely well qualified?
(Lord Cranbrook) I think all of these are distortions
of our position.
44. I do hope so. This is why I am asking you,
(Lord Cranbrook) I find it hard to give a simple answer
other than the answers we have given. There are aspects of Dr
Aickin's criticism which are outwith the regulator's capacity
as defined in the regulations. We operate under the terms of approval
with Customs. We apply the regulations and, as I have said, I
believe as regulator we do a good job. For the more strategic
thinking it is really your Committee, Chairman, it is Government.
Dr Sills will explain the levels of interaction that we have with
the Treasury, with Customs, in looking forward and in reviewing
the regulations as they are applied.
45. Obviously it is helpful to the Committee
to know the position of Entrust about the scheme you are operating.
One would have thought that you would have a view about it as
to how it sits and as to how it has developed. Dr Sills, you made
the remark that the scheme has grown through its own success way
beyond perhaps what its originators' designed. I think it is appropriategiven
that the difficulties you have had with Dr Aickin are perhaps
symptomatic with the difficult position you find yourself in as
private company regulator in these perhaps unique circumstancesthat
we can ask your opinion as to how things ought to go forward from
here. You will have seen the opinion of the Select Committee but,
as the people operating the scheme, you are surely in a position
to give an even more expert view than ours. Ours is based on the
evidence that we have received but you are the people at the sharp
end running this so you have seen the difficulty you have got
into with Dr Aickin, which I think is a product of this peculiar
neither public nor private position that you find yourselves in.
I am asking for your views as to whether you think there is merit
in the recommendations of the Select Committee that the whole
Landfill Tax Credit Scheme should be looked at again and how it
(Dr Sills) To answer the last part, yes, it is a function
of this Committee and Government to review its instruments for
using taxation in whatever way they feel suitable. It is for us
to advise Government and the Select Committee what we think, yes.
Our view, however, is that there is a fundamental difference in
perspective between the Committee's view as expressed in the report
and what the rules under which we work are. Those are two areas.
46. I completely understand that. That is clear.
I do not think in our report there is a suggestion that in terms
of the terms of referenceapart from this unhappy incident
with Dr Aickinof how you are carrying out your duties that
there is a series of criticisms that seriously stack up against
you. There are questions about accountability and Customs and
Excise but in terms of how the actual Tax Credit Scheme works
on the ground I think you are entitled to want to say that in
its own terms it is a very successful scheme. Now, we then come
back to the point that you are operating that scheme and I am
inviting you to comment on whether or not you now think it is
time for the whole operation of it to be reviewed, and particularly
the position you find yourselves in as a private company having
to act as a regulator in something which has perhaps grown out
of all proportion from what those who designed it expected.
(Lord Cranbrook) This is a strategic question. What
we have attempted to do to assist this is to evaluate and to discuss
with those who are concerned where and what would be the role
of the regulator if the scheme was to be modified in a way in
which political circles, your Committee or Government, chose to
do so. We feel that our proper role is to provide advice from
the regulator's point of view of how alternative schemes would
be regulated in order to maintain probity and compliance with
whatever way the regulations were amended. This is the strategic
way in which we are operating.
47. To a degree that is around the detail of
how the regulations are carried out, as you say, with due probity
and compliance. I will tell you what I am driving at. We made
a recommendation in our report which would remove Entrust from
the scheme if it was carried out completely and there would be
a whole new set up. What I am trying to get at is when you read
that do you think "well, strategically although it is not
our responsibility, it is the responsibility of politicians and
Government to come to these decisions, they have got a point",
or do you read that and think "how could they possibly come
to that conclusion, look what has happened to the scheme, it has
been a wonderful success, it is going to be simply ruinous to
turn around and tear it up and try and replace it with something
else"? What is your view? Do you think we are crazy?
(Lord Cranbrook) As I say, the formal discussions
within our organisation have consisted of evaluating and outlining
what regulation we see would be necessary and what the role would
be under a wide scenario of alternatives.
48. What would you say you have learned from
this episode and how do you see the role of this Select Committee?
(Lord Cranbrook) The first thing I have learned, frankly,
and in my parliamentary experience of 21 years I have never come
across it before, is contempt. The contempt was unintended and
it has been a real lesson to me to find what can arise inadvertently
in these things. I have apologised for that and that has been
a very real and memorable lesson to us all. Secondly, I hope that
the Select Committee realises that when I appear before you I
appear before you as the Chairman of an appointed regulatory body
and that is the perspective from which I have tried to assist
you to reach conclusions. The second lesson I have learned is
that you are always going to tweak at this and you are always
going to try to pull me out of that frame.
49. How do you see the role of this Select Committee?
What role would you say it is performing?
(Lord Cranbrook) This Select Committee has a very
honourable history and it has had a decisive effect in the waste
management field in which I have taken an interest for many years.
When I was a Member of the other place I was also concerned with
parallel committees and I have a great respect for this Committee.
50. My Lord, is it not mildly illogical to say
to the Committee that we have a responsibility of the sort you
have outlined and then when Dr Aickin gives us evidence with which
you disapprove you sack him?
(Lord Cranbrook) As I say, the criticisms Dr Aickin
has made of Entrust, which we find difficult to deal with, are
those which say that Entrust and the scheme should be something
completely different. What we sought from Dr Aickin as Chairman
of EBCO was to bring to us recommendations, points of view, discussions
that would assist and strengthen the relationship between EBCO
as the representative body of environmental bodies and assist
us to make that effective.
51. As long as those views do not in any way
highlight any difficulty?
(Lord Cranbrook) That would not have been the case,
no. We have had endless telephone conversations. If you, Mrs Dunwoody,
had been in our office you would have realised that at the beginning
of the scheme, when it was totally unknown, intending and actual
environmental bodies required an enormous amount of support and
that support has come from our staff. An extension of that was
to obtain overall views from environmental bodies when they became
so numerous in order to assist us to provide the support and backing
that is necessary in order to be proper regulators. Do you want
to say more?
(Dr Sills) I do not think I have got anything more
52. But in the first instance you thought that
EBCO was a tame poodle of Entrust, did you not, you had a large
say in who was on EBCO?
(Lord Cranbrook) No, it was quite the reverse. As
we made clear in our evidence there was considerable discussion
at our board on ways and means in which we could create an EBCO
that was not seen to be a tame poodle. We had to start somewhere
and we started with environmental bodies who were known to us
and were active and were interested and were prepared to be engaged
in this. The Chairman of EBCO was chosen by those environmental
bodies. We encouraged EBCO in the management plan that was drawn
up to seek membership actually of EBCO, which is its board, through
a process of election. We were anxious that election process should
bring into EBCO bodies with a very wide range of experience, small
and large, regional, national and so on. So every effort that
we made was to set up EBCO as as free and independent source of
advice to us as possible.
53. But the facts contradict that entirely.
The minute Dr Aickin started in his evidence to criticise Entrust,
and Dr Aickin was also the Chairman of EBCO, he got sacked. It
just contradicts what you have just said.
(Lord Cranbrook) Dr Aickin had already resigned as
Chairman of EBCO, I think it would be correct to say, by the time
he gave evidence.
(Dr Sills) 31 October is my understanding.
(Lord Cranbrook) 31 October.
54. Just on this point really, a final question.
You have made it very clear what you were looking for from the
relationship that you intended to have with Dr Aickin, but do
you now accept that when he appeared before us as a Select Committee
he was fully entitled to answer the questions that we put to him
as Members in the way that he did and that it was wrong to have
sacked him for having done that?
(Lord Cranbrook) I do because that is the nature of
the contempt. I accept entirely that and I have apologised unreservedly
55. You have obviously given a very full apology
to the Committee for the contempt, would you like just to emphasise
that you are keen now for the general public and anyone involved
in the scheme to come up with constructive criticism?
(Lord Cranbrook) This has always been our position
and I will repeat that it is still our position.
56. Can I say I am certainly disappointed that
you do not seem to want to look at the strategic issue of whether
you yourselves are the appropriate body now to do the regulation
or whether you should be looking for some other body to take over
your function, is that correct?
(Lord Cranbrook) If it is your opinion, Chairman,
I will take that advice seriously.
Chairman: On that note, can I thank you very