Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 140-159)



  140. I thought this was an agreed report. Paragraph 4.25, "Customs have been concerned that ENTRUST have not always received information which the environmental bodies are obliged to submit. It is particularly important that the notification of contributions received by environmental bodies is sent on time as it can affect Customs' ability to match contributions to the tax credits claimed by site operators". Is that the case or not?
  (Mr Broadbent) Yes, it is.

  141. So it is a problem.
  (Mr Broadbent) There are two different things. The notification of contributions received, which is what we require to match and reconcile the tax credits, is a financial information flow. When a landfill site operator makes a contribution, the environmental body tells ENTRUST, ENTRUST tells us and we can match it. That is different from the unspent money, which was the first point you were on, which I agree is an issue and the thing we have asked ENTRUST to do and they have done very effectively is to make unspent money a very high risk factor in deciding who gets visited.

  142. So there are two separate issues, both of which are cause for concern. Can we trust that in any forthcoming regulations you will address both of them?
  (Mr Broadbent) I cannot give that guarantee. I can explain why in more detail if you wish.

  143. I am running desperately up against the clock. Perhaps you could give a note to the Committee on that.
  (Mr Broadbent) I shall be happy to do that.[1]

  144. That would be extremely helpful. Is it correct that the ENTRUST board has changed the memorandum of articles of association of the company in order that funds held by the company could be used for purposes other than those laid down by the landfill tax regulations, if the regulatory role of ENTRUST were to be transferred to another body?

  (Lord Cranbrook) No.

  145. Has there been a change in the memorandum of articles of association?
  (Lord Cranbrook) Yes.

  146. What does that change achieve?
  (Lord Cranbrook) One of the changes on which I think your question is probably based is having been informed that it was impossible for us to be a charity, we removed the phrase "charities" where it referred to "other charities" because we were not a charity. It was a linguistic change.

  147. What you are saying is that it does not have the effect such that the funds held by the company could be used for purposes other than those laid down by the landfill tax.
  (Lord Cranbrook) No, we would never be able to make a change of that nature, nor would we wish to.

  148. What you are saying is that it would always have to go through a charity.
  (Lord Cranbrook) No, not a charity necessarily but a body which was performing a similar function.

Mr Bacon

  149. I should like to take you through the sister committee's examination a couple of years ago in July 1999 and go through a couple of its recommendations and see where we currently stand. The Committee then said that although it was entirely possible that all the Committee's concerns were unfounded, the fact that there was lack of transparency made this difficult to ascertain and that changes must be made not only to ensure that there is no abuse but also to ensure that it can be seen that there is no abuse. The first recommendation is that where money is given for schemes, there should be a public register setting out the rules for the scheme, including how much publicity the donor or donors, including third parties, can expect. Where do we stand now on that?
  (Mr Broadbent) The third party donor change was introduced and there was a debate when it was introduced as to whether it should be a disclosure to the regulator, to ENTRUST, or Customs, or a public disclosure. The conclusion was that it should be a disclosure to the regulator so it is not in the public record. That was done because there was a number of contributors, mostly local individuals, who wished to remain anonymous and whose contributions might have ceased.

  150. You bring me to the fifth point which was that ENTRUST intends to keep the register of third parties on a confidential basis. The Committee said that this was unacceptable and the register should be in the public domain. What is the view of Customs about whether the register should be in the public domain?
  (Mr Broadbent) The view of the Government at the time was that on balance—and it was a balanced judgement—it should remain confidential so as not to deter contributors. If the scheme continues in its present form, this is one of the issues the Government will want to consider, but as the scheme grows and the contributors get larger, you have to keep these things carefully under review. It is fair to ask whether that is still true today.

  151. Another recommendation was that any links between the donor or donors and any benefits derived from patents developed as a result of funding by landfill tax credits should be clearly stated by requiring donors to register such potential patents. Is that the case now?
  (Mr Broadbent) I am afraid off hand I cannot answer that question. I shall have to make enquiries and write to the Committee.[2]

  152. If you could let us have a note.
  (Mr Broadbent) I am very happy to do that.

  153. The third point was that no-one should serve on the ENTRUST board who is currently employed by a landfill operator. Do the regulations now provide for that?

  (Mr Broadbent) I am not sure that the regulations were changed to provide that. Our terms of approval for the ENTRUST board provide for the balance of interest on the board and there have been board changes since that report.

  154. Would it now be impossible for someone who is currently employed by a landfill operator to serve on the ENTRUST board?
  (Mr Broadbent) I do not believe it would be impossible.

  155. So there is no procedural inhibition to it.
  (Mr Broadbent) No, there is no procedural mechanism to prevent that from happening.

  156. So it could happen.
  (Mr Broadbent) Yes, it could happen.

  157. Even though the Committee said they thought it should not happen.
  (Mr Broadbent) That is correct.

  158. The fourth one was concerning your own sampling of what is going on. Plainly although contributions to environmental bodies are not public money and therefore outside your control, the credit claimed by landfill site operators is tax and Customs and Excise should examine and verify a reasonable sample of schemes each year with the same rigour with which they look at VAT returns. With how much rigour do you think you look at the scheme?
  (Mr Broadbent) The scheme as a whole or individual schemes?

  159. Specifically whether you verify a reasonable sample with the same rigour with which you look at VAT returns.
  (Mr Broadbent) We certainly have provided ENTRUST with input on skills and systems and expertise to set up risk based systems which I am satisfied are at least as good as the VAT systems. We also monitor ENTRUST and indeed accompany a certain number of their visits to make sure those controls are being implemented in practice.


1   Ev 24, Appendix 1. Back

2   Ev 24, Appendix 1. Back

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