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Standing Committee B
Tuesday 8 April 2003
[Mr. Win Griffiths in the Chair]
The Minister for the Environment (Mr. Michael Meacher): On a point of order, Mr. Griffiths. May I make a brief statement? Last week, hon. Members voiced some disquiet about the availability of a regulatory impact assessment for the Bill. My Department's officials and I are concerned about that. I need hardly say that the Department has nothing to hide, and that it has been pro-active in complying with the spirit and letter of regulatory legislation.
I confirm that the first RIA has been available on the Department's website since 15 November 2002, when the Bill was introduced in another place. I confirm also that the updated RIA was put on the website on 3 April, the day of the Committee's first sitting. To reach that website, one has to type ''waste and emissions trading bill'' into the search field on the home page of the website or in the indicated field on the search page. In addition, the first edition of the RIA has been in the Libraries of both Houses since 15 November, and the updated RIA has been available in both Libraries since Friday 28 March. I hope that that meets the concerns that were expressed about the availability of the RIA in its original and updated forms.
Mr. John Hayes (South Holland and The Deepings): Further to that point of order, Mr. Griffiths. First, I thank the Minister for his typical courtesy in drawing those matters to the attention of the Committee. It would be helpful if that sort of information could be included in the explanatory notes. Before raising the matter this morning, I checked the availability of the regulatory impact assessment with the Clerk of the Committee—he will no doubt confirm it—and received the assurance that it was not available. However, there was some uncertainty and confusion—for the sake of brevity I put it no more strongly than that. I am grateful for the Minister's courtesy, but this matter could provide a useful lesson.
Secondly, Mr. Griffiths, I ask whether the blinds can be lowered as I am suffering considerable discomfort because of the bright sunlight.
The Chairman: I am sure that that can be arranged.
Trading and other transfer of landfill allowances
Norman Baker (Lewes): I beg to move amendment No. 11, in
clause 7, page 5, leave out lines 40 and 41.
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The sun is shining a little on the Liberal Democrats this morning, and I am happy to leave it there. However, I concur with the hon. Member for South Holland and The Deepings (Mr. Hayes): it would be useful if the information that was available could be drawn to the attention of hon. Members. It need not be provided, but it would be useful if we knew that it was available and had been told how to gain access to it.
The amendment deals with trading and other transfers of landfill allowances. My hon. Friend the Member for Guildford (Sue Doughty) and I seek to remove subsection (3)(f), which would allow local authorities to employ brokers to facilitate such transfers. We have two reasons for wanting to remove that provision. First, the transfer of allowances ought to be simple. Waste disposal authority employees will be knowledgeable about such matters; they will have been responsible for letting contracts and will therefore know how to do the job. I suggest that they are capable of dealing with their opposite numbers in other authorities to facilitate such transactions. The idea that they might need, or would even want, to employ brokers to facilitate transfers is slightly worrying.
Secondly, I can imagine local authorities running up huge bills by employing brokers. Doubtless their services will not come cheap, as they, like solicitors and lawyers—I do not wish to libel any of the latter who might be in the Room—have an interest in making things go on for as long as possible. I believe that they will add nothing to the process. Indeed, good working relationships between waste disposal authorities, which will be essential, could be marred and undermined by the intrusion of a third person who might wish to push an authority further than it wanted to go. That would introduce a jarring note into an otherwise useful process. I fully support the concept of a landfill allowance, but it should be left to local authorities.
I am also concerned that there is no restriction on who can qualify as a broker. Could Biffa, for example, provide brokers? If so, that is dangerous and unwelcome; it could lead to dissension among local authorities and increase costs. I hope that the Minister will think very carefully about it.
Mr. Jonathan Sayeed (Mid-Bedfordshire): It is a pleasure to serve under your chairmanship, Mr. Griffiths.
The amendment was proposed by my noble Friend Lord Dixon-Smith, and it is interesting that Liberal Democrat Members have taken it up. The argument is that the Bill provides for the intervention of third-party brokers in the trading of waste disposal allowances. Lord Dixon-Smith considered that to be wrong; he believed that the only parties that should be allowed to trade in allowances are WDAs, of which there are a limited number. He contended that all local authorities know and work with one another; they are familiar with arrangements across boundaries and counties. He believed that normal meetings and lines of communication were sufficient and would allow
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WDAs with surplus capacity to locate WDAs that were deficient in capacity and do business with them over the phone.
The Bill also provides for the necessity of regulation to define how the third party should behave when involved in trading practices. Lord Dixon-Smith believed that to be unnecessary. In response to those arguments, Lord Whitty suggested that the measure was intended to give local authorities flexibility when operating the scheme and, at the same time, to safeguard public interest in relation to propriety. If they wished, local authorities could choose to contract out their operations or buy in professional advice.
Lord Whitty said that there was no question of additional costs. I found that a surprising statement. He went on to say that if local authorities wished to outsource their activities and if professional brokers became involved, the Government would need to regulate their involvement, so the Bill covers that eventuality. He did say, however, that no local authority would have to employ a broker.
Understandably, brokers will engage in such activities to make a profit. Can the Minister tell us how much profit brokers are likely to make? Obviously, any profit made will be at a cost to the local authority, the WDA, and if that cost is a significant burden, will it not be transferred to the consumer? Do we need what may be unnecessary insurance that will impose an extra layer of administrative and bureaucratic burdens? It will take precious funds away from local authorities—funds that should be spent on investment in sustainable waste management infrastructure.
Amendments Nos. 38 and 11 both seek to amend clause 7, and I wonder whether we need the clause at all. Would not it simplify procedures if we got rid of it and streamlined the bureaucracy?
Mr. Hayes: My hon. Friend referred to the debate in the other place and to the nub of the argument, which is whether the clause will create additional burdens, bureaucracy, uncertainty and confusion. It seems to me that a forceful argument can be made for saying that bringing another party into the process will do exactly that. As it is, local authorities will have to undergo a substantial process of change in adapting to the Bill's constraints and demands. We raised the important issue of flexibility when the Committee last met, and my hon. Friend has rehearsed it again. It is important that local authorities have enough flexibility to meet these demanding targets.
Conversely, there is also the issue of clarity. The proposed change is significant and, although the message is simple, the implementation will be complex, given the complicated relationship between authorities, and their different profiles and performance, which we discussed at our previous sitting. Many people are concerned that the addition of a third party will reduce clarity and add to confusion.
I would therefore like the Minister to be tested on the issue, and I am interested to hear his views. Like
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me, he will have studied the report of the Lords debate. I have it close to hand, and I was reacquainting myself with it as my hon. Friend spoke, because I wanted to be clear about the arguments. The Minister will be aware of those arguments, which were put in a measured and sensible way by Members of the House of Lords with some expertise in this field. I would like firm assurances that the clause will not lead to extra bureaucracy in the way that my hon. Friend suggests.
Mr. Meacher: The Minister will be tested. Indeed, we are starting by discussing a matter that has caused some concerns, which I will try to allay.
As has been said, the issue of brokers was dealt with in another place, and my ministerial colleague, Lord Whitty, explained the position. The amendment would prevent regulations from making provision for licensing and regulating persons engaged as brokers in the transfer of allowances. The Bill does not prevent the use of brokers—of course, it does not require them either—and the current provision is intended only to regulate and license such persons. However, I acknowledge the intention behind the amendment, and I appreciate the concerns that have been expressed.
Let me explain brokers' intended role in the trading scheme. First, the allowance scheme is not intended to be speculative. Landfill allowances can be held only by waste disposal authorities; indeed, clause 7 expressly prevents regulations from authorising the acquisition of allowances by anyone other than a WDA. However, the Bill does not prevent WDAs from using brokers. WDAs that feel that a broker's expertise in markets would help them to trade more effectively will be able to make use of that expertise. That is the purpose of involving brokers.
Let me make it clear, however, that we do not intend to help to create a whole new breed of broker to draw money out of the system—absolutely not. Local authorities are used to working with each other, and many have particularly good experience of working in partnership on waste management issues. I fully expect that most WDAs will choose to negotiate with known colleagues when trading allowances. However, to many authorities, the idea of trading is, frankly, alien, and smaller authorities might not have sufficient expertise to deal with such a scheme without the use of outside help.
The use of brokers is not compulsory; it is simply an option. If a local authority does not want to use them, it will not do so. In our view, there is no value in forcing WDAs to trade in a certain way that is not suitable for them, particularly before consultation on the issue has taken place. If brokers are used, we believe that they should be subject to regulation. That is different from the situation in most private markets, which are self-regulating. However, I am sure that hon. Members would agree that, where public money is concerned, self-regulation might not be sufficient to ensure public trust in the system.